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ViaSat Announces First Quarter Fiscal Year 2017 Results

Posted: August 10, 2016 12:15 am (UTC)

CARLSBAD, Calif., Aug. 9, 2016 /PRNewswire/ — ViaSat Inc. (NASDAQ: VSAT), a global broadband services and technology company, today announced financial results for the fiscal first quarter ended June 30, 2016.

“Our financial results for the first quarter of fiscal 2017 show continued strong demand in satellite services and sustained growth in our government segment,” said Mark Dankberg, ViaSat chairman and CEO. “New aeronautical services contracts with American Airlines and the U.S. government highlight the unique and compelling competitive advantages of affordable, high bandwidth mobility services. Almost five years after launch, ViaSat-1 is delivering record earnings and margins, while also delivering benchmark performance. We are investing in R&D and capital resources to scale this formula through new technology, delivering even more bandwidth-efficient satellites and expansion, to regional, and then global markets. The upcoming launch of ViaSat-2 gives us an opportunity to extend our competitive advantage for sustained growth in residential broadband, mobile WiFi, aeronautical and maritime applications in both commercial and government markets.”

      Financial Results      (In millions,      except per share      data)            Q1 FY17        Q1 FY16        Year-Over-Year                                                         Change     ---                                                 ------      Revenues                  $363.1         $344.4                   5.4%     --------                  ------         ------                    ---      Net income(1)               $1.9           $2.6                (28.9)%     ------------                ----           ----                 ------      Non-GAAP net      income(1)                 $11.3          $12.1                 (6.8)%     ------------               -----          -----                  -----      Adjusted EBITDA            $80.2          $77.5                   3.5%     ---------------            -----          -----                    ---      Diluted per share      net income(1)             $0.04          $0.05                (20.0)%     -----------------          -----          -----                 ------      Non-GAAP diluted      per share net      income(1)                 $0.23          $0.25                 (8.0)%     ----------------           -----          -----                  -----      Fully diluted      weighted average      shares                     50.2           48.8                   2.7%     -----------------           ----           ----                    ---       New contract      awards                   $336.3         $305.5                  10.1%     ------------              ------         ------                   ----      Sales backlog(2)          $912.9         $872.5                   4.6%     ---------------           ------         ------                    --- 

      Segment Results      (In millions)         Q1 FY17        Q1 FY16         Year-Over-Year                                                              Change     ---                                                      ------      Satellite Services     ------------------        New contract awards         $141.8          $120.3                     17.9%       -------------------         ------          ------                      ----        Revenues                    $152.4          $132.4                     15.1%       --------                    ------          ------                      ----        Operating profit(3)          $30.9           $17.0                     81.1%       ------------------           -----           -----                      ----        Adjusted EBITDA              $71.9           $54.6                     31.6%       ---------------              -----           -----                      ----       Commercial Networks     -------------------        New contract awards          $62.9           $46.2                     36.1%       -------------------          -----           -----                      ----        Revenues                     $65.6           $66.8                    (1.8)%       --------                     -----           -----                     -----        Operating loss(3)          $(38.5)        $(18.7)                 (105.7)%       ----------------            ------          ------                   -------        Adjusted EBITDA            $(24.2)         $(6.1)                 (295.6)%       ---------------             ------           -----                   -------       Government Systems     ------------------        New contract awards         $131.6          $139.0                    (5.3)%       -------------------         ------          ------                     -----        Revenues                    $145.2          $145.2                      0.0%       --------                    ------          ------                       ---        Operating profit 3           $18.0           $15.9                     12.8%       ------------------           -----           -----                      ----        Adjusted EBITDA              $32.8           $28.9                     13.5%       ---------------              -----           -----                      ---- 
       1            Attributable to ViaSat, Inc.                  common stockholders.      (2)          Amounts include certain backlog                  adjustments due to contract                  changes and amendments.      (3)          Before corporate and amortization                  of acquired intangible assets. 

Satellite Services

In the fiscal first quarter of 2017, ViaSat's Satellite Services segment achieved record high revenues for the fourth consecutive quarter, up 15% year-over-year, with continued growth in the residential broadband and in-flight connectivity businesses. Operating profit increased 81% year-over-year to $30.9 million, generating Adjusted EBITDA of $71.9 million, a 32% increase over the same period last year. Adjusted EBITDA margin increased to 47%. Highlights for the quarter include:

     --  ViaSat served 696,000 residential subscribers at the close of the fiscal         first quarter of 2017, up 2% compared to the fiscal first quarter of         2016.     --  Average revenue per user (ARPU) in the residential internet business         grew by 8% year-over-year to $60.00, a new record high, reflecting         higher bandwidth, higher value plans and growth in value added services.     --  The in-flight connectivity business continued to scale, with ViaSat's         in-flight internet service deployed on 509 commercial aircraft as of the         end of the first fiscal quarter of 2017.     --  American Airlines selected ViaSat's high-speed in-flight internet         service for its new Boeing 737 MAX fleet, with service availability         planned for September 2017.     --  ViaSat, along with partner Eutelsat, introduced in-flight internet         service in Europe with EL AL Israel Airlines. The service, currently in         customer trials, is expected to enter full retail service before the end         of this calendar year. 

Commercial Networks

ViaSat's Commercial Networks segment revenues were slightly lower compared with the prior year period following completion of the initial infrastructure portion of the large Australian nbn(TM) project, and up on a sequential quarter basis. Revenue for the fiscal first quarter reflected certain mobile broadband satellite communications systems programs and larger antenna systems programs nearing completion, partially offset by revenue increases from broadband terminal orders under the nbn project. The segment reported a higher operating loss and lower Adjusted EBITDA for the fiscal first quarter of 2017, as compared to the same period last year due to continued planned investments in the ViaSat-3 broadband communications platform and additional Supplemental Type Certificate (STC) efforts for in-flight internet wins. These investments contributed to significant increases in research and development (R&D) expenses in the fiscal first quarter of 2017, as compared to the same period last year, and also represented the primary drivers for the year-over-year Adjusted EBITDA decrease. Highlights for the quarter include:

     --  The ViaSat-2 satellite communications platform successfully passed         critical program milestones, including completion of assembly,         completion of functional performance testing and completion of the first         phase of environmental testing in preparation for a launch window         beginning at the end of calendar 2016.     --  Significant progress was made by ViaSat and Boeing Satellite Systems         International (BSSI) on the ViaSat-3 program, as the two organizations         continued to collaborate on integrating ViaSat's highly-innovative         communications payload with Boeing's upgraded platform. Subsequent to         the end of the fiscal first quarter, ViaSat and BSSI finalized the two         separate agreements for the delivery of the first two ViaSat-3 class         satellites, including payload integration.     --  Subsequent to the fiscal first quarter end, ViaSat received a series of         new STC approvals from the Federal Aviation Administration (FAA). The         new STC approvals cover ViaSat's hybrid Ku-/Ka-band satellite antenna         for Airbus A320 type aircraft primarily deployed on Virgin America, and         installation and activation of the ViaSat in-flight connectivity system         on Boeing 737-800 and 900 series type aircraft for deployment across the         EL AL Israel Airlines fleet. 

Government Systems

In the first quarter of fiscal year 2017, ViaSat's Government Systems segment revenues were flat, compared to the prior year period while operating profit and Adjusted EBITDA grew significantly, each up 13% to $18.0 million and $32.8 million, respectively. Operating profit and Adjusted EBITDA expansion were driven by strong growth in services revenues and a decrease in Government Systems segment R&D spending. Highlights for the quarter include:

     --  The government mobile broadband business continued to expand. ViaSat was         awarded a sole-source contract to provide global in-flight connectivity         service to Air Force One and other U.S. government senior leader         aircraft. This specific award covered support for VC-25s, C-17s, C-32s,         C-37s, C-40s and the complete range of VIP and special air mission         aircraft. ViaSat has now deployed its government mobile broadband         internet service on more than 400 government aircraft.     --  Managed Wi-Fi revenues increased, as ViaSat continued to execute on its         contract with NEXCOM (Navy Exchange Service Command) to deliver Managed         Wi-Fi internet and voice services to an increasing number of sailors and         their families at Navy facilities worldwide.     --  ViaSat delivered its 500(th) production KOR-24A Small Tactical Terminal         (STT), which is the only small form factor Link 16 terminal in sustained         production in the world today.     --  The ViaSat KOR-24A STT was selected for use on the CP-140 Aurora         aircraft used by the Royal Canadian Air Force.     --  ViaSat secured NSA certification for two of its information assurance         encryption devices, as well as continued to expand its 'edge to cloud'         network encryption portfolio with a first-to-market 100 Gbps Type 1         Ethernet encryptor. 

Conference Call

ViaSat will host a conference call to discuss the first quarter of fiscal year 2017 results. Details follow:

      DATE/TIME: Tuesday, August 9, 2016 at 5:00 p.m. Eastern Time      DIAL-IN:    (877) 640-9809 in the U.S.; (914) 495-8528                 international      WEBCAST:      REPLAY:     Available from 8:00 p.m. Eastern Time on Tuesday,                 August 9 until 11:59 p.m. Eastern Time on                 Wednesday, August 10 by dialing (855) 859-2056                 for U.S. callers and (404) 537-3406 for                 international callers; conference ID 59127631. 

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 2017 and beyond; satellite construction and launch activities; the performance and benefits of our ViaSat-2 and ViaSat-3 class satellites; the expected 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; and the roll-out and uptake of products and services by, and services offered by, our airline partners and commercial networks customers. Readers are cautioned that actual results could differ materially 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 consummate our proposed strategic partnership arrangement with Eutelsat and to realize the anticipated benefits thereof; our ability to successfully develop, introduce and sell new technologies, products and services; 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 on our ability to sell products and services; 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, 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.

About ViaSat

ViaSat, Inc. (NASDAQ: VSAT) keeps the world connected. As a global broadband services and technology company, ViaSat ensures consumers, businesses, governments and military personnel have communications access – anywhere – whether on the ground or in-flight. The Company's innovations in designing highest-capacity satellites and secure ground infrastructure and terminal technologies coupled with its international network of managed Wi-Fi hotspots enable ViaSat to deliver a best available network that extends the reach and accessibility of broadband internet service, globally. For more information, visit:, or follow ViaSat on Facebook, Twitter, LinkedIn or YouTube.

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 © 2016 ViaSat, Inc. All rights reserved. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners. ViaSat is a registered trademark of ViaSat, Inc.

                                            Condensed Consolidated Statement of Operations                                                             (Unaudited)                                                (In thousands, except per share data)                                                        Three months ended                                                    ------------------                                                        June 30, 2016                      June 30, 2015                                                       -------------                      -------------       Revenues:      Product revenues                                                  $160,676                         $168,348      Service revenues                                                   202,454                          176,030                                                                        -------                          -------      Total revenues                                                     363,130                          344,378       Operating expenses:      Cost of product      revenues                                                          120,680                          125,830      Cost of service      revenues                                                          127,582                          117,609      Selling, general      and administrative                                                 79,400                           71,107      Independent      research and      development                                                        25,177                           15,608      Amortization of      acquired      intangible assets                                                   2,513                            4,810      Income from      operations                                                          7,778                            9,414      Interest expense,      net                                                               (4,811)                         (5,888)      Income before      income taxes                                                        2,967                            3,526      Provision for      income taxes                                                          810                            1,007                                                                            ---                            -----      Net income                                                           2,157                            2,519      Less: Net income      (loss)      attributable to      the noncontrolling      interest, net of      tax                                                                   302                             (89)      Net income      attributable to      ViaSat Inc.                                                        $1,855                           $2,608                                                                         ======                           ======       Diluted net income      per share      attributable to      ViaSat Inc. common      stockholders                                                        $0.04                            $0.05                                                                          =====                            =====      Diluted common      equivalent shares                                                  50,170                           48,840       AN ITEMIZED RECONCILIATION BETWEEN NET INCOME ATTRIBUTABLE TO      VIASAT INC.      ON A GAAP BASIS AND NON-GAAP BASIS IS AS FOLLOWS:                                                       Three months ended                                                    ------------------                                                        June 30, 2016                      June 30, 2015                                                       -------------                      -------------       GAAP net income      attributable to      ViaSat Inc.                                                        $1,855                           $2,608      Amortization of      acquired      intangible assets                                                   2,513                            4,810      Stock-based      compensation      expense                                                            12,761                           10,709      Income tax effect                                                  (5,839)                         (6,011)      Non-GAAP net      income      attributable to      ViaSat Inc.                                                       $11,290                          $12,116                                                                        =======                          =======      Non-GAAP diluted      net income per      share attributable      to ViaSat Inc.      common      stockholders                                                        $0.23                            $0.25                                                                          =====                            =====      Diluted common      equivalent shares                                                  50,170                           48,840       AN ITEMIZED RECONCILIATION BETWEEN NET INCOME ATTRIBUTABLE TO      VIASAT INC.      AND ADJUSTED EBITDA IS AS FOLLOWS:                                                       Three months ended                                                    ------------------                                                        June 30, 2016                      June 30, 2015                                                       -------------                      -------------       GAAP net income      attributable to      ViaSat Inc.                                                        $1,855                           $2,608      Provision for      income taxes                                                          810                            1,007      Interest expense,      net                                                                 4,811                            5,888      Depreciation and      amortization                                                       59,998                           57,311      Stock-based      compensation      expense                                                            12,761                           10,709      Adjusted EBITDA                                                    $80,235                          $77,523                                                                        =======                          ======= 

      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, 2016                                       Three months ended June 30, 2015                                                      --------------------------------                                       --------------------------------                                                        Satellite Services                        Commercial Networks               Government Systems           Total            Satellite Services         Commercial Networks            Government Systems           Total                                                       ------------------                        -------------------               ------------------           -----            ------------------         -------------------            ------------------           -----      Segment operating profit      (loss) before corporate      and amortization of      acquired intangible assets                                      $30,867                                      $(38,531)                           $17,955          $10,291                    $17,041                      $(18,733)                     $15,916             $14,224      Depreciation *                                                    35,340                                          5,792                              8,640           49,772                     32,380                          5,698                        8,127              46,205      Stock-based compensation      expense                                                           2,808                                          5,081                              4,872           12,761                      2,468                          4,020                        4,221              10,709      Other amortization                                                 2,922                                          3,456                              1,335            7,713                      2,755                          2,897                          644               6,296                                                                        -----                                          -----                              -----            -----                      -----                          -----                          ---               -----      Adjusted EBITDA before      other                                                           $71,937                                      $(24,202)                           $32,802           80,537                    $54,644                       $(6,118)                     $28,908              77,434                                                                      =======                                       ========                            =======                                    =======                        =======                      =======      Other                                                                                                                                                              (302)                                                                                                     89                                                                                                                                                                         ----                                                                                                     ---      Adjusted EBITDA                                                                                                                                                  $80,235                                                                                                 $77,523                                                                                                                                                                      =======                                                                                                 ======= 
       *            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 Sheet                                                                       (Unaudited)                                                                     (In thousands)                           As of                    As of                                                                As of                      As of      Assets          June 30, 2016           March 31, 2016                              Liabilities and Equity    June 30, 2016             March 31, 2016                     -------------           --------------                                                        -------------             --------------       Current assets:                                                            Current liabilities:      Cash and cash      equivalents                    $47,252                    $42,088             Accounts payable                                 $94,413                      $95,645      Accounts      receivable,      net                            262,670                    286,724             Accrued liabilities                              156,894                      184,344                                                                                  -------------      Inventories                     155,511                    145,161             Total current liabilities                        251,307                      279,989      Prepaid      expenses and      other current      assets**                        53,453                     47,583             Senior Notes, net**                              575,330                      575,304      Total current      assets                         518,886                    521,556             Other long-term debt, net**                      458,730                      370,224                                                                                 Other liabilities                                 37,928                       37,371                                                                                                                                  ------                       ------                                                                                 Total liabilities                              1,323,295                    1,262,888                                                                                                                               ---------                    ---------      Property,      equipment and      satellites,      net                          1,462,897                  1,385,107      Other acquired                                                                Total ViaSat Inc. stockholders'      intangible                                                                   equity      assets, net                     31,039                     33,604                                                            1,162,344                    1,129,103      Goodwill                        116,560                    117,040              Noncontrolling interest in                                                                                   subsidiary                                        5,610                        5,321                                                                                  -------------      Other assets**                  361,867                    340,005             Total equity                                   1,167,954                    1,134,424                                                                                  ------------      Total assets                 $2,491,249                 $2,397,312             Total liabilities and equity                  $2,491,249                   $2,397,312                                  ==========                 ==========                                                           ==========                   ========== 
       **             The Company adopted Accounting                    Standards Updated 2015-03 Interest                    - Imputation of Interest (ASC 835-                    30): Simplifying the Presentation                    of Debt Issuance Costs                    retrospectively during the first                    quarter of fiscal 2017 and                    resultantly reclassified                    unamortized debt issuance costs as                    a direct deduction from the                    carrying amount of the Senior Notes                    and other long-term debt for all                    periods presented. 

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SOURCE ViaSat Inc.


Company – ViaSat Inc.
Location: California (GeographyCode)
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