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Aug 9, 2019 6:15 AM ET

Viasat Announces First Quarter Fiscal Year 2020 Results


Viasat Announces First Quarter Fiscal Year 2020 Results

iCrowd Newswire - Aug 9, 2019

CARLSBAD, Calif.,- Viasat Inc. (NASDAQ: VSAT), a global communications company, today announced financial results for the fiscal first quarter ended June 30, 2019.

“We’re very pleased to report a robust start to fiscal year 2020,” said Mark Dankberg, Viasat chairman and CEO. “Our fiscal year 2020 financial outlook benefits from, and builds on, the momentum from a record fiscal year 2019. Broadband satellite services set quarterly records powered by sustained demand for higher value residential service plans, and 76% year-over-year growth in active commercial aircraft using our in-flight connectivity systems. Broadband service revenue also continues to diversify, boosted by growth in nascent vertical markets and geographic expansion. Government systems revenues jumped 37% compared to last year, and maintains a compelling growth outlook for products and services with robust new contracts and delivery order agreements. Company-wide Adjusted EBITDA of $96.8 million, up 115% compared to the same quarter last year, yielded lower net leverage even as capital investments in the ViaSat-3 network continued apace. We’re augmenting investments in ViaSat-3 space and ground infrastructure with prudent early market entry strategies that we believe create long-term global growth opportunities beyond the regional surge we’re enjoying now catalyzed by ViaSat-2.”

Financial Results

       

(In millions, except per share data)

Q1 FY20

Q1 FY19

Year-Over-
Year Change

 
 

Revenues

$537.0

$438.9

22%

 

Net loss1  

($11.5)

($34.0)

-66%

 

Non-GAAP net income (loss)1 

$6.4

($17.5)

*

 

Adjusted EBITDA

$96.8

$45.0

115%

 

Diluted per share net loss1

($0.19)

($0.57)

-67%

 

Non-GAAP diluted per share net income (loss)1

$0.10

($0.30)

*

 

Fully diluted weighted average shares2

60.9

59.2

3%

 
         

New contract awards3

$505.8

$569.7

-11%

 

Sales backlog

$1,839.8

$1,629.3

13%

 
         

Segment Results

       

(In millions)

Q1 FY20

Q1 FY19

Year-Over-
Year Change

 
 

Satellite Services

       

  New contract awards3

$192.0

$153.5

25%

 

  Revenues

$196.8

$153.6

28%

 

  Operating loss5

($2.1)

($29.9)

-93%

 

  Adjusted EBITDA

$67.1

$34.3

96%

 
         

Commercial Networks

       

  New contract awards

$99.0

$114.1

-13%

 

  Revenues 

$79.0

$95.1

-17%

 

  Operating loss5

($49.9)

($47.0)

6%

 

  Adjusted EBITDA

($35.2)

($32.7)

7%

 
         

Government Systems

       

  New contract awards

$214.8

$302.1

-29%

 

  Revenues 

$261.2

$190.2

37%

 

  Operating profit5

$45.9

$24.9

84%

 

  Adjusted EBITDA

$64.9

$43.5

49%

 
 

Attributable to Viasat, Inc. common stockholders. 
As the three months ended June 30, 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. 
3 Awards exclude future revenue under recurring consumer commitment arrangements. 
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.

Satellite Services 
In the first quarter of fiscal year 2020, Viasat’s Satellite Services segment achieved its sixth sequential quarter of revenue growth, setting a record high of $196.8 million. This reflected gains of 28% year-over-year and 4% sequentially. Key trends for the quarter include: Average Revenue Per User (ARPU) growth resulting from higher value residential and enterprise plans, driving record U.S. fixed broadband revenues; record revenues in commercial in-flight connectivity (IFC) as in-service aircraft increased 76% year-over-year and in-flight services expanded; and international growth in fixed residential service, expanded Community Wi-Fi hotspots and enterprise services. Year-over-year, new contract awards increased 25% to $192.0 million, segment operating loss decreased by 93% to $2.1 million and Adjusted EBITDA increased by 96% to $67.1 million, as existing fixed broadband and commercial in-flight services businesses scaled efficiently, alongside investments in global broadband businesses. Highlights for the quarter include:

Commercial Networks 
For the first quarter of fiscal year 2020, Viasat’s Commercial Networks segment revenues decreased 17% year-over-year, as IFC terminal deliveries returned to more normalized levels, following accelerated American Airlines deliveries in fiscal year 2019. On a sequential basis, the Company grew expected IFC terminal orders under existing contracts at quarter end by 4% to approximately 510 IFC terminals, and advanced global market expansion opportunities. Segment operating loss was higher and Adjusted EBITDA was lower for the first quarter of fiscal year 2020 compared to the same period last year primarily as a result of the expected reduction in IFC terminal deliveries. Highlights for the quarter include:

Government Systems  
Viasat’s Government Systems segment revenues for the first quarter of fiscal year 2020 were $261.2 million, an increase of 37% year-over-year with very strong performances reported across the segment’s product lines. Operating profit increased 84% to $45.9 million and Adjusted EBITDA increased 49% to $64.9 million, compared to the prior year period, primarily due to higher top line revenues and lower research and development expenses.  Highlights for the quarter include:

Conference Call 
Viasat will host a conference call to discuss the first quarter fiscal year 2020 results. Details follow:

DATE/TIME: 

Thursday, August 8, 2019 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, August 8 until 11:59 p.m. Eastern Time on Friday, August 9 by dialing (855) 859-2056 for U.S. callers and (404) 537-3406 for international callers; conference ID 9387634.

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 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 AustraliaBrazil and China; the number of GESAC sites expected to be deployed by the end of 2019; 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; and  receipt of awards under existing IDIQ contracts and the conversion of IDIQ contracts and contracts with unexercised options into additional sales and revenue. 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 © 2019 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 

 

June 30, 2019

 

June 30, 2018

       

Revenues:

     

Product revenues

$       263,615

 

$       218,129

Service revenues

273,422

 

220,740

Total revenues

537,037

 

438,869

       

Operating expenses:

     

Cost of product revenues

196,940

 

173,448

Cost of service revenues

187,519

 

171,432

Selling, general and administrative

125,132

 

112,642

Independent research and development

33,474

 

33,373

Amortization of acquired intangible assets

2,037

 

2,453

Loss from operations

(8,065)

 

(54,479)

Interest expense, net

(10,249)

 

(11,288)

Loss before income taxes 

(18,314)

 

(65,767)

Benefit from income taxes

7,210

 

29,205

Equity in income of unconsolidated affiliate, net

1,367

 

1,065

Net loss

(9,737)

 

(35,497)

Less: net income (loss) attributable to noncontrolling interests, net of tax

1,731

 

(1,487)

Net loss attributable to Viasat Inc. 

$        (11,468)

 

$        (34,010)

       

Diluted net loss per share attributable to Viasat Inc. common stockholders

$            (0.19)

 

$            (0.57)

Diluted common equivalent shares

60,917

 

59,208

       

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 

 

June 30, 2019

 

June 30, 2018

       

GAAP net loss attributable to Viasat Inc.

$        (11,468)

 

$        (34,010)

Amortization of acquired intangible assets

2,037

 

2,453

Stock-based compensation expense

21,227

 

19,126

Income tax effect (1)

(5,418)

 

(5,045)

Non-GAAP net income (loss) attributable to Viasat Inc.

$           6,378

 

$        (17,476)

Non-GAAP diluted net income (loss) per share attributable to Viasat Inc. common stockholders

$             0.10

 

$            (0.30)

Diluted common equivalent shares

60,917

 

59,208

       

(1)The income tax effect is calculated using the tax rate applicable for the non-GAAP adjustments.

       

AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.

AND ADJUSTED EBITDA IS AS FOLLOWS:

     

(In thousands)

Three months ended 

 

June 30, 2019

 

June 30, 2018

       

GAAP net loss attributable to Viasat Inc.

$        (11,468)

 

$        (34,010)

Benefit from income taxes

(7,210)

 

(29,205)

Interest expense, net

10,249

 

11,288

Depreciation and amortization

84,012

 

77,797

Stock-based compensation expense

21,227

 

19,126

Adjusted EBITDA

$         96,810

 

$         44,996

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 June 30, 2019

 

Three months ended June 30, 2018

   

Satellite 
Services

 

Commercial 
Networks

 

Government 
Systems

 

Total

 

Satellite 
Services

 

Commercial 
Networks

 

Government 
Systems

 

Total

Segment operating (loss) profit before corporate and amortization of acquired intangible assets

 

$  (2,070)

 

$      (49,861)

 

$        45,903

 

$ (6,028)

 

$ (29,936)

 

$      (47,008)

 

$        24,918

 

$ (52,026)

Depreciation(2)

 

53,594

 

5,519

 

9,689

 

68,802

 

50,010

 

5,493

 

8,290

 

63,793

Stock-based compensation expense

 

6,487

 

7,388

 

7,352

 

21,227

 

5,293

 

7,106

 

6,727

 

19,126

Other amortization

 

7,709

 

1,798

 

3,666

 

13,173

 

6,909

 

1,667

 

2,975

 

11,551

Equity in income of unconsolidated affiliate, net

 

1,367

 

 

 

1,367

 

1,065

 

 

 

1,065

Noncontrolling interests

 

 

 

(1,731)

 

(1,731)

 

924

 

 

563

 

1,487

Adjusted EBITDA 

 

$ 67,087

 

$      (35,156)

 

$        64,879

 

$ 96,810

 

$  34,265

 

$      (32,742)

 

$        43,473

 

$  44,996

                                 

(2)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

June 30, 2019

 

As of

March 31, 2019

   

As of

June 30, 2019

 

As of

March 31, 2019

Assets

   

Liabilities and Equity

 
                 

Current assets:

       

 Current liabilities: 

     

Cash and cash equivalents

$       129,883

 

$          261,701

 

 Accounts payable 

$       145,544

 

$          157,275

Accounts receivable, net

303,619

 

300,307

 

 Accrued and other liabilities ** 

324,885

 

308,268

Inventories

263,833

 

234,518

 

 Current portion of long-term debt 

19,652

 

19,937

Prepaid expenses and other current assets

106,847

 

90,646

 

 Total current liabilities 

490,081

 

485,480

Total current assets

804,182

 

887,172

         
         

 Senior notes 

1,283,746

 

1,282,898

         

 Other long-term debt 

99,210

 

110,005

         

 Non-current operating lease liabilities ** 

297,867

 

Property, equipment and satellites, net

2,216,045

 

2,125,290

 

 Other liabilities 

118,090

 

120,826

Operating lease right-of-use assets **

320,227

 

 

 Total liabilities 

2,288,994

 

1,999,209

Other acquired intangible assets, net

20,354

 

22,301

 

 Total Viasat Inc. stockholders’ equity 

1,963,231

 

1,907,748

Goodwill

121,615

 

121,719

 

 Noncontrolling interest in subsidiary 

10,061

 

8,330

Other assets

779,863

 

758,805

 

 Total equity 

1,973,292

 

1,916,078

Total assets

$    4,262,286

 

$       3,915,287

 

 Total liabilities and equity 

$    4,262,286

 

$       3,915,287

Contact Information:

Viasat, Inc.








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