Viasat Announces Third Quarter Fiscal Year 2020 Results
CARLSBAD, Calif., Feb. 6, 2020 /PRNewswire/ -- Viasat Inc. (NASDAQ: VSAT), a global communications company, today announced financial results for the fiscal third quarter ended December 31, 2019.
"We achieved another quarter of solid revenue growth and margin improvement in our Q3 of fiscal year 2020," said Mark Dankberg, Viasat chairman and CEO. "We're building on a differentiated foundation of business fundamentals in our government systems and satellite services segments. New contract awards and backlog signal continued momentum, and build confidence in a strong finish to our fiscal year 2020 and on into fiscal year 2021. We believe our unique vertical technology and service delivery integration creates compelling long-term opportunities for global expansion. Growth drivers for our government business are in the early innings and are substantially enhanced by global coverage. Our diverse portfolio of fixed and mobile broadband satellite services gives us the flexibility and resilience to thrive in the distinct market environments of each region of the world. We see enormous demand for bandwidth. We're confident in our strategic approach and are focused on executing the opportunities before us, and delivering the ViaSat-3 constellation into service."
Financial Results
(In millions,
except per share
data)
Q3 FY20
Q3 FY19
Year-Over-
First 9
First 9
Year-Over-
Year Months Months Year
Change
FY20
FY19 Change
---
Revenues $588.2 $554.7 6% $1,717.5 $1,511.0 14%
---
Net income
(loss)(1) $6.5 ($10.4)
* ($1.8) ($70.1) (97)%
---
Non-GAAP net
income (loss)(1) $24.7 $6.9 256% $52.0 ($19.5)
*
---
Adjusted EBITDA $122.3 $108.7 13% $337.3 $231.1 46%
---
Diluted per share
net income
(loss)(1) $0.10 ($0.17)
* ($0.03) ($1.17) (97)%
---
Non-GAAP diluted
per share net
income (loss)(1) $0.39 $0.12 225% $0.83 ($0.33)
*
---
Fully diluted
weighted average
shares(2) 62.9 60.2 5% 61.4 59.7 3%
---
New contract
awards(3) $577.4 $448.6 29% $1,775.5 $1,756.9 1%
---
Sales backlog4 $1,923.7 $1,827.8 5% $1,923.7 $1,827.8 5%
---
Segment Results
(In millions)
Q3 FY20
Q3 FY19
Year-Over-
First 9
First 9
Year-Over-
Year Months Months Year
Change
FY20
FY19 Change
---
Satellite Services
---
New contract
awards(3) $210.7 $185.4 14% $615.3 $503.6 22%
---
Revenues $211.7 $177.7 19% $614.2 $494.2 24%
---
Operating profit
(loss)5 $3.6 ($10.2)
* $6.6 ($65.0)
*
---
Adjusted EBITDA $75.1 $56.7 33% $212.9 $130.8 63%
---
Commercial
Networks
---
New contract
awards $134.2 $107.4 25% $295.3 $344.7 (14)%
---
Revenues $84.7 $127.0 (33)% $251.7 $336.6 (25)%
---
Operating loss5 ($46.9) ($31.2) 50% ($143.6) ($117.4) 22%
---
Adjusted EBITDA ($30.6) ($17.0) 80% ($97.6) ($74.3) 31%
---
Government Systems
---
New contract
awards $232.5 $155.8 49% $864.9 $908.6 (5)%
---
Revenues $291.8 $250.1 17% $851.5 $680.3 25%
---
Operating profit5 $59.1 $49.9 18% $167.2 $119.7 40%
---
Adjusted EBITDA $77.8 $69.0 13% $222.0 $174.7 27%
---
1 Attributable to Viasat, Inc.
common stockholders.
2 As the three months ended
December 31, 2018 and nine months
ended December 31, 2019 and 2018
financial information resulted in
a net loss, the weighted average
number of shares used to calculate
basic and diluted net loss per
share is the same, as diluted
shares would be anti-dilutive.
However, as the non-GAAP
financial information for the nine
months ended December 31, 2019
resulted in a non-GAAP net
income, 62.8 million diluted
weighted average number of shares
were used instead to calculate
non-GAAP diluted net income per
share.
(3) Awards exclude future revenue
under recurring consumer
commitment arrangements.
4 Amounts include certain backlog
adjustments due to contract
changes and amendments. Our
backlog includes contracts with
subscribers for fixed
broadband services in our satellite
services segment. Backlog does not
include anticipated purchase
orders and requests for the
installation of in-flight
connectivity systems or future
recurring in-flight internet
service revenues under our
commercial in-flight internet
agreements in our Commercial
Networks
and Satellite Services segments,
respectively.
5 Before corporate and amortization
of acquired intangible assets.
* Percentage not meaningful.
Company Highlights
-- Viasat named to Glassdoor's 2020 Best Places to Work for U.S. large
employers
-- At the 2019 World Radiocommunication Conference, International
Telecommunication Union Member States agreed to expand Ka-band spectrum
availability for satellite broadband mobility services, enabling Viasat
to expand its global mobility broadband offerings
-- Viasat, in cooperation with the Government Business Council, released
the first-ever 'State of Military Communications' study which
highlighted military technology improvement tactics to alleviate mission
risks
-- Following the close of third quarter fiscal year 2020, Viasat announced
the appointment of Dr. Theresa Wise, former chief information officer of
Delta Air Lines and Northwest Airlines, to the Company's Board of
Directors
Satellite Services
-- Q3 Fiscal Year 2020 Financials
-- Revenues reached a new high of $211.7 million, a 19% increase
year-over-year and a 3% increase sequentially, marking the eighth
sequential quarter of revenue gains
-- New contract awards increased 14% year-over-year to $210.7 million
-- Segment operating income was $3.6 million, compared to a $10.2 million
operating loss in the prior year period, while Adjusted EBITDA increased
by 33% year-over-year to $75.1 million as fixed and mobile broadband
revenues continued to scale on the ViaSat-2 satellite system. Excluding
the $4.0 million ViaSat-2 insurance gain in the same period last year,
segment Adjusted EBITDA increased 43%
-- Business Highlights
-- U.S. fixed broadband subscriber average revenue per user (ARPU) reached
a record $89.71, an increase of 15% year-over-year on approximately flat
subscriber growth, as new subscribers continued to embrace Viasat's
premium broadband service plans
-- In Mexico, Viasat continued to diversify its broadband service offerings
and launched residential service; while consumer engagement on Community
Wi-Fi internet hotspots grew on a sequential quarter basis
-- In Brazil, Viasat's participation in the Governo Eletrônico - Serviço
de Atendimento ao Cidadão (GESAC) initiative continued to ramp, with
over 1,500 new sites deployed in the quarter
-- In Business Aviation, Viasat's next-generation Ka-band In-Flight
Connectivity (IFC) system was approved for Gulfstream G280 aircraft and
received Type Certification for Embraer Praetor 600 aircraft; Viasat's
dual-band business aviation IFC system also received Supplemental Type
Certificate for the Bombardier Global 5000/6000/GEX family
-- In Commercial Aviation, IFC service was active on 1,379 commercial
aircraft - up 23% year-over-year with a gross annual passenger
opportunity reaching over 250 million people
-- As reported during Viasat's prior earnings call, in early third quarter
of fiscal year 2020, Viasat was selected by Brazil's Azul Airlines to
install IFC equipment/service on more than 100 combined Airbus A320neo
and Embraer E195-E2 aircraft; additionally EL AL Israel Airlines
committed to go full fleet with Viasat, adding Viasat's latest equipment
to its new Boeing 777 widebody and remaining Boeing 737 narrowbody fleet
-- Following the close of third quarter fiscal year 2020, Viasat:
-- Expects to install its IFC equipment on over 690 additional
commercial aircraft under existing contracts, with rising momentum
seen in international aviation markets as passengers increasingly
value an 'at home' internet experience while in-flight
-- Announced expansion of its third-party platform engagement program,
with the addition of fuboTV, one of the first live TV and sports
streaming services to expand distribution to the U.S. aviation
market
-- Fiscal Year-to-Date Summary
-- Fiscal year-to-date, Satellite Services segment reached record revenue
levels with operating profit and Adjusted EBITDA performance increases
compared to the same period last year reflecting year-over-year impacts
similar to those seen in the third quarter of fiscal year 2020
Commercial Networks
-- Q3 Fiscal Year 2020 Financials
-- Revenues were $84.7 million, a 33% decrease year-over-year, reflecting
the year-ago period's accelerated IFC equipment installations for
American Airlines; on a sequential quarter basis IFC terminal deliveries
were up despite the continued grounding of the Boeing 737 MAX aircraft
-- New contract awards were at $134.2 million, a 25% year-over-year
increase
-- Segment operating loss was 50% higher and Adjusted EBITDA was 80% lower
compared to the same period last year due to expected reductions in IFC
terminal deliveries and higher research and development costs associated
with the ViaSat-3 space and ground segments
-- Business Highlights
-- Continued progress made on the ViaSat-3 program with multiple project
milestones being achieved including critical unit deliveries;
integration and test activities on both the ViaSat-3 (Americas) and
ViaSat-3 (Europe, Middle East, Africa) satellites; and successful
completion of the Preliminary Design Review (PDR) for the third ViaSat-3
(Asia Pacific) satellite
-- Began deployment of the U.S. and European ground networks for the first
two ViaSat-3 satellites and initiated siting work for the Asia-Pacific
ground network
-- Completed successful over-the-air test antenna switching on Viasat's
second-generation hybrid Ku-/Ka-band aviation antenna, highlighting
antenna readiness for global aviation opportunities
-- Fiscal Year-to-Date Summary
-- Fiscal year-to-date, Commercial Networks segment revenue was lower,
operating loss was higher and Adjusted EBITDA was lower compared to the
same period last year, reflecting year-over-year impacts similar to
those seen in the third quarter of fiscal year 2020
Government Systems
-- Q3 Fiscal Year 2020 Financials
-- Revenues were $291.8 million, an increase of 17% year-over-year led by
expanding positions in the Company's satellite communications (SATCOM),
mobile networking solutions and tactical data links products
-- New contract awards were up 49% year-over-year to $232.5 million
securing a positive book-to-bill ratio performance for the year-to-date
period
-- Operating profit increased 18% year-over-year to $59.1 million while
Adjusted EBITDA increased 13% to $77.8 million
-- Business Highlights
-- Fiscal year 2020 U.S. Appropriations legislation signed into law;
created new opportunities for Viasat in IFC and cybersecurity, as
additional government defense funds were released
-- Viasat's Multi-Mission Terminal began the UK Skynet SATCOM assurance and
certification process; allowing the UK Ministry of Defence to access
secure, resilient, high-speed, multi-orbit, multi-frequency band and
multi-network SATCOM architectures
-- Viasat expanded its presence in Australia and established two
maintenance, test and integration facilities to enhance in-country
sovereign defense capabilities
-- Viasat made third-party government terminal modification kits available,
enabling U.S. Department of Defense and coalition forces to use existing
SATCOM terminals to access high-capacity, secure and resilient networks,
without needing to completely replace the entire set of terminal
equipment
-- Fiscal Year-to-Date Summary
-- Fiscal year-to-date, Government Systems segment revenue, operating
profit and Adjusted EBITDA performance for the segment were higher
compared to the same period last year reflecting strong performance
across the segment's product lines, especially SATCOM, tactical data
links products, information assurance and global mobility/intelligence
surveillance and reconnaissance offerings.
Conference Call
Viasat will host a conference call to discuss the third quarter fiscal year 2020 results. Details follow:
DATE/TIME: Thursday, February 6, 2020 at 5:00 p.m. Eastern
Time
DIAL-IN: (877) 640-9809 in the U.S.; (914) 495-8528
international
WEBCAST:
investors.viasat.com.
REPLAY: Available from 8:00 p.m. Eastern Time on Thursday,
February 6 until 11:59 p.m. Eastern Time on
Friday, February 7 by dialing (855) 859-2056 for
U.S. callers and (404) 537-3406 for international
callers; conference ID 9295872.
About Viasat
Viasat is a global communications company that believes everyone and everything in the world can be connected. For more than 30 years, Viasat has helped shape how consumers, businesses, governments and militaries around the world communicate. Today, the Company is developing the ultimate global communications network to power high-quality, secure, affordable, fast connections to impact people's lives anywhere they are--on the ground, in the air or at sea. To learn more about Viasat, visit: www.viasat.com, go to Viasat's Corporate Blog, or follow the Company on social media at: Facebook, Instagram, LinkedIn, Twitter or YouTube.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements include, among others, statements that refer to opportunities, growth and outlook for the remainder of fiscal year 2020 and beyond; satellite construction and launch activities; the expected completion, performance, capacity, service, coverage, service speeds, availability and other features of our satellites, and the timing, cost, economics and other benefits associated therewith; international expansion plans, including in Brazil and Mexico; the number of IFC systems expected to be installed under existing contracts with commercial airlines; and the impacts of new contracts entered into with, and the roll-out, ramp-up and uptake of products and services by, and services to be offered by, our airline partners and other customers. Readers are cautioned that actual results could differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ include: our ability to realize the anticipated benefits of the ViaSat-2 and ViaSat-3 class satellites; unexpected expenses related to our satellite projects; our ability to successfully implement our business plan for our broadband satellite services on our anticipated timeline or at all; risks associated with the construction, launch and operation of our satellites, including the effect of any anomaly, operational failure or degradation in satellite performance; our ability to realize the anticipated benefits of our acquisitions or strategic partnering arrangements; our ability to successfully develop, introduce and sell new technologies, products and services; the number of purchase orders that are submitted and accepted for the installation of IFC systems with respect to aircraft under contract; audits by the U.S. government; changes in the global business environment and economic conditions; delays in approving U.S. government budgets and cuts in government defense expenditures; our reliance on U.S. government contracts, and on a small number of contracts which account for a significant percentage of our revenues; reduced demand for products and services as a result of continued constraints on capital spending by customers; changes in relationships with, or the financial condition of, key customers or suppliers; our reliance on a limited number of third parties to manufacture and supply our products; increased competition; introduction of new technologies and other factors affecting the communications and defense industries generally; the effect of adverse regulatory changes (including changes affecting spectrum availability or permitted uses) on our ability to sell products and services; orbital arc congestion affecting availability of Ka-band spectrum; the effect of changes in the way Ka-band spectrum is used by others; our level of indebtedness and ability to comply with applicable debt covenants; our involvement in litigation, including intellectual property claims and litigation to protect our proprietary technology; and our dependence on a limited number of key employees. In addition, please refer to the risk factors contained in our SEC filings available at www.sec.gov, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements for any reason.
Use of Non-GAAP Financial Information
To supplement Viasat's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), ViaSat uses non-GAAP net income (loss) attributable to Viasat Inc. and Adjusted EBITDA, measures Viasat believes are appropriate to enhance an overall understanding of Viasat's past financial performance and prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding specific expenses that we believe are not indicative of our core operating results. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting and facilitates comparisons to the Company's historical operating results. Further, these non-GAAP results are among the primary indicators that management uses as a basis for evaluating the operating performance of our segments, allocating resources to such segments, planning and forecasting in future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of specific adjustments to GAAP results is provided in the tables below.
Copyright © 2020 Viasat, Inc. All rights reserved. Viasat, the Viasat logo and the Viasat signal are registered trademarks of Viasat, Inc. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three months ended
Nine months ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
---
Revenues:
Product revenues $303,090 $301,865 $873,535 $800,429
Service revenues 285,134 252,829 843,982 710,608
Total revenues 588,224 554,694 1,717,517 1,511,037
Operating expenses:
Cost of product
revenues 214,098 226,020 634,113 616,368
Cost of service
revenues 190,132 176,686 564,675 523,348
Selling, general and
administrative 136,005 114,566 388,528 340,328
Independent research
and development 32,164 28,928 99,952 93,661
Amortization of
acquired intangible
assets 1,856 2,487 5,920 7,375
Income (loss) from
operations 13,969 6,007 24,329 (70,043)
Interest expense, net (9,097) (14,865) (28,473) (40,198)
Income (loss) before
income taxes 4,872 (8,858) (4,144) (110,241)
Benefit from
(provision for)
income taxes 3,911 (3,230) 8,731 35,679
Equity in income of
unconsolidated
affiliate, net 1,807 1,351 4,328 2,730
Net income (loss) 10,590 (10,737) 8,915 (71,832)
Less: net income
(loss) attributable
to noncontrolling
interests, net of tax 4,114 (333) 10,713 (1,694)
Net income (loss)
attributable to
Viasat Inc. $6,476 $(10,404) $(1,798) $(70,138)
===
Diluted net income
(loss) per share
attributable to
Viasat Inc. common
stockholders $0.10 $(0.17) $(0.03) $(1.17)
===
Diluted common
equivalent shares (2) 62,916 60,152 61,405 59,698
AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.
ON A GAAP BASIS AND NON-GAAP BASIS IS AS FOLLOWS:
(In thousands, except
per share data)
Three months ended
Nine months ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
---
GAAP net income (loss)
attributable to
Viasat Inc. $6,476 $(10,404) $(1,798) $(70,138)
Amortization of
acquired intangible
assets 1,856 2,487 5,920 7,375
Stock-based
compensation expense 21,908 20,155 64,236 58,658
Income tax effect (1) (5,573) (5,306) (16,320) (15,393)
Non-GAAP net income
(loss) attributable
to Viasat Inc. $24,667 $6,932 $52,038 $(19,498)
===
Non-GAAP diluted net
income (loss) per
share attributable to
Viasat Inc. common
stockholders $0.39 $0.12 $0.83 $(0.33)
===
Diluted common
equivalent shares (2) 62,916 60,152 62,754 59,698
(1)The income tax effect is calculated using the tax rate applicable for the non-GAAP adjustments.
(2)As the three months ended December 31, 2018 and nine months ended December 31, 2019 and 2018 financial information resulted in a net loss, the weighted average number of shares used to calculate basic and diluted net loss per share is the same,
as diluted shares would be anti-dilutive. However, as the non-GAAP financial information for the nine months ended December 31, 2019 resulted in a non-GAAP net income, diluted weighted average number of shares were used instead to calculate
non-GAAP diluted net income per share.
AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.
AND ADJUSTED EBITDA IS AS FOLLOWS:
(In thousands)
Three months ended
Nine months ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
---
GAAP net income (loss)
attributable to
Viasat Inc. $6,476 $(10,404) $(1,798) $(70,138)
(Benefit from)
provision for income
taxes (3,911) 3,230 (8,731) (35,679)
Interest expense, net 9,097 14,865 28,473 40,198
Depreciation and
amortization 88,759 80,834 255,109 238,105
Stock-based
compensation expense 21,908 20,155 64,236 58,658
Adjusted EBITDA $122,329 $108,680 $337,289 $231,144
===
AN ITEMIZED RECONCILIATION BETWEEN SEGMENT OPERATING PROFIT (LOSS) BEFORE
CORPORATE AND AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS AND ADJUSTED EBITDA IS AS FOLLOWS:
(In thousands)
Three months ended December 31, 2019 Three months ended December 31, 2018
--- ---
Satellite
Commercial
Government Total Satellite
Commercial
Government Total
Services Networks Systems Services Networks Systems
Segment operating profit (loss) before corporate and
amortization of acquired intangible assets $3,600 $(46,917) $59,142 $15,825 $(10,196) $(31,219) $49,909 $8,494
Depreciation(3) 55,003 6,725 11,078 72,806 51,060 5,663 9,849 66,572
Stock-based compensation expense 6,631 7,635 7,642 21,908 6,250 6,842 7,063 20,155
Other amortization 8,075 1,964 4,058 14,097 7,648 1,721 2,406 11,775
Equity in income of unconsolidated affiliate, net 1,807 1,807 1,351 1,351
Noncontrolling interests (4,114) (4,114) 562 (229) 333
Adjusted EBITDA $75,116 $(30,593) $77,806 $122,329 $56,675 $(16,993) $68,998 $108,680
Nine months ended December 31, 2019
Nine months ended December 31, 2018
--- ---
Satellite
Commercial
Government Total Satellite
Commercial
Government Total
Services Networks Systems Services Networks Systems
Segment operating profit (loss) before corporate and
amortization of acquired intangible assets $6,648 $(143,559) $167,160 $30,249 $(64,971) $(117,424) $119,727 $(62,668)
Depreciation(3) 158,701 18,070 31,179 207,950 151,893 16,658 27,011 195,562
Stock-based compensation expense 19,523 22,296 22,417 64,236 17,276 20,706 20,676 58,658
Other amortization 23,691 5,641 11,907 41,239 21,608 5,716 7,844 35,168
Equity in income of unconsolidated affiliate, net 4,328 4,328 2,730 2,730
Noncontrolling interests (10,713) (10,713) 2,269 (575) 1,694
Adjusted EBITDA $212,891 $(97,552) $221,950 $337,289 $130,805 $(74,344) $174,683 $231,144
(3)Depreciation expenses not
specifically recorded in a
particular segment have been
allocated based on other
indirect allocable costs, which
management believes is a
reasonable method.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
As of
As of
As of
As of
Assets
December 31, 2019
March 31, 2019
Liabilities and Equity
December 31, 2019
March 31, 2019
---
Current assets:
Current liabilities:
Cash and cash
equivalents $47,778 $261,701
Accounts payable $152,386 $157,275
Accounts
receivable,
net 316,439 300,307
Accrued and other liabilities (4) 355,916 308,268
Inventories 283,300 234,518
Current portion of long-term debt 30,101 19,937
Prepaid
expenses and
other current
assets 102,724 90,646
Total current liabilities 538,403 485,480
Total current
assets 750,241 887,172
Senior notes 1,284,913 1,282,898
Other long-term debt 257,778 110,005
Non-current operating lease liabilities(4) 289,159
Property,
equipment and
satellites,
net 2,513,013 2,125,290
Other liabilities 118,120 120,826
Operating
lease right-
of-use
assets (4) 312,509
Total liabilities 2,488,373 1,999,209
Other acquired
intangible
assets, net 16,271 22,301
Total Viasat Inc. stockholders' equity 2,006,268 1,907,748
Goodwill 121,745 121,719
Noncontrolling interest in subsidiary 19,043 8,330
Other assets 799,905 758,805
Total equity 2,025,311 1,916,078
Total assets $4,513,684 $3,915,287
Total liabilities and equity $4,513,684 $3,915,287
===
(4)The balances as of
December 31, 2019 reflect
the Company's adoption of
Accounting Standards Update
2016-02, Leases, commonly
referred to as ASC 842.
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SOURCE Viasat, Inc.
