INMARSAT > Q1 2019 Results Q1 2019 results 1 May 2019
INMARSAT > Q1 2019 Results Performance review Rupert Pearce Chief Executive Officer
Operational Review Continued revenue growth ˃ Robust results, building on positive momentum achieved in 2018 ˃ Further success in building and aggressively defending market share − Progress across our diversified growth portfolio − Well placed to capitalise on future growth opportunities ˃ Medium term outlook and future guidance unchanged ˃ Recommended offer for Inmarsat plc − Subject to shareholder vote on 10 May and regulatory approvals − Expected to be completed during Q4 2019 3
Maritime performance Strong performance in fast-developing market segments Q1 2019 progress Future roadmap Fleet Xpress High level of FX vessels installed Install 5,000+ FX vessel commitments 36% of FX installations were new customers Drive into new non-merchant VSAT segments Aiming to capture Run rate of installations well ahead of expectations Complete Xpress Link migration programme in 2019 further share in high Strategic partners continue to gain traction Launch Crew Xpress into the market potential VSAT Xpress Link migration programme on track Support improvement in ARPU over medium to long term market Good initial market traction from Crew Xpress product Launch value-added services over Fleet Edge platform FleetBroadband Continued customer migration to VSAT, including FX Enhanced protection of FB base, to FX transition Significant reduction in vessel loss rate, compared to 2018 Sustain ARPU through functionality improvements and usage Focused on retaining and package progression Highlights initial traction from management actions taken FB vessels and/or Lower cost/size, higher functionality of next gen FB terminals migrating to FX Focused on supporting and growing market share 4
Government performance Strong performances across both businesses Q1 2019 progress Future roadmap US business supported by contract wins and expanded Expand footprint in new markets, sectors and niches mandates achieved in 2018 Continued growth in underlying revenues from Boeing ToP Major long term contracts fully embedded Increased GX hardware sales outside the US Deliver on MILSATCOM augmentation opportunities Continue to become more embedded in significant customer platforms 5
Aviation IFC performance Further progress in supporting customers into service Q1 2019 progress Future roadmap c.1,790 aircraft under contract and committed to hardware, Additional contract wins from new business pipeline + c. 300 aircraft under option Further increase in aircraft in service, from 100+ in 2018, 600 aircraft installed with Inmarsat broadband IFC services to generate high margin airtime revenue 145 GX connected aircraft in commercial service Service roll-out of European Aviation Network L-band IFC business remains robust Next phase of strategic agreement with Panasonic Avionics Further success in building long term leadership position 6
Aviation Core performance Continued revenue growth Q1 2019 progress Future roadmap Business and Lower SwiftBroadband revenues, mainly Further roll-out of JetConneX, including General aviation due to customer migrations to JetConneX incremental customer migration from SwiftBroadband c. 475 now installed with JetConneX New growth opportunities through our I-6 satellite platform from early 2020’s Safety and Some additional aircraft usage and Full commercial roll-out of SB-S for next gen Operational delayed customer billing for Classic Aero aero safety Services Swift Broadband-Safety achieved further Continue development of IRIS European Space market traction Agency Air Traffic Management programme Focus on connected aircraft opportunities Leadership position maintained across key segments 7
Enterprise performance Further foundations built for future IIoT opportunities Q1 2019 progress Future roadmap On-going market pressure on legacy product base Continue to protect revenues of legacy product lines Lower level of satellite phone handset sales Further develop major IIoT partnerships to help establish solutions in key target areas (mining, M2M revenues remain resilient logistics & agriculture) Early stage trials continue on IIoT initiatives Secure recovery of ultimate RigNet award Connecting the digital society remains a long term opportunity 8
2019 Priorities Focused on delivering further growth Organisational Maritime Government Aviation Enterprise Infrastructure Objectives Grow share in VSAT Continue to strengthen Further commercial Progress in building market Further strengthen our global segments, protect & diversify major customer momentum in IFC. Launch position in IIoT. Stabilize networks & organizational mid-market position and relationships new safety product & develop legacy products infrastructure launch first applications connected aircraft position 2019 Further progress with FX Continued strong USG Further increase in IFC Continued growth Launch of GX-5 satellite installation programme – performance, driven by aircraft under contract, in M2M revenue proof Continued preparation wholesale and retail new contract wins and installed & in service points Move into billing for for launch of I-6 increased usage from Successful Crew Xpress Commercial launch IIoT deployments in satellites in 2020/21 existing customers roll-out of the European target markets, with key Launch new service Further revenue Aviation Network partners Retention of FB customers delivery & billing growth from Boeing Further JX installs in Manage legacy products platforms Complete migration of Continue to diversify BGA, with continued revenues XL & FB customers to FX Further steps taken and internationalise usage growth in SB to establish strong Launch first set of maritime Develop global managed Increased usage in organisational platform business applications services capability SOS products & next Continued drive to steps for IRIS reduce legacy costs Remain well positioned to capitalise on future growth opportunities 9
INMARSAT > Q1 2019 Results Financial Review Tony Bates Chief Financial Officer
Group Income statement – Q1 2019 Q1 2019 Q1 2018 Change $m $m Excluding Ligado Q1 2019 Q1 2018 Change 346.9 345.4 1.5 Revenue Revenue 346.7 313.3 33.4 Direct costs (66.0) (53.0) (13.0) (66.0) (53.0) (13.0) Direct costs Gross margin 280.9 292.4 (11.5) Gross margin 280.7 260.3 20.4 Indirect costs* (111.5) (117.5) 6.0 (111.3) (117.5) 6.2 Indirect costs* Adjusted EBITDA* 169.4 174.9 (5.5) 169.4 142.8 26.6 Adjusted EBITDA* (128.3) (115.5) (12.8) Depreciation & Amortisation (17.3) (27.6) 10.3 Net financing costs** Adjusted profit before tax 23.8 31.8 (8.0) Tax (5.5) (2.4) (3.1) Adjusted profit after tax 18.3 29.4 (11.1) (273.7) 24.2 (297.9) Change in value of derivative Exceptional items (nil tax) (17.0) - (17.0) Statutory profit after tax (272.4) 53.6 (326.0) * Excludes $17.0m exceptional item relating to costs associated with the recommended offer for the Group ** Before change in value of derivative 11
Business Unit Summary ($m) – Q1 2019 Maritime 2019 2018 Government 2019 2018 Aviation - IFC 2019 2018 Revenue 128.5 142.0 Revenue 100.7 78.3 Revenue 47.0 19.3 Direct Costs (10.4) (22.1) Direct Costs (23.5) (14.2) Direct Costs (24.3) (7.5) Gross Margin 118.1 91.9% 119.9 84.4% Gross Margin 77.2 76.7% 64.1 81.9% Gross Margin 22.7 48.3% 11.8 61.1% Indirect Costs (8.6) (10.3) Indirect Costs (10.9) (10.8) Indirect Costs (15.0) (12.3) EBITDA 109.5 85.2% 109.6 77.2% EBITDA 66.3 65.8% 53.3 68.1% EBITDA 7.7 16.4% (0.5) Aviation - Core 2019 2018 Enterprise 2019 2018 Central Services 2019 2018 Revenue 38.9 36.7 Revenue 28.2 32.7 Revenue 3.6 36.4 Direct Costs (3.4) (6.0) Direct Costs (0.3) (0.4) Direct Costs (4.1) (2.8) Gross Margin 24.8 87.9% 26.7 81.7% Gross Margin 38.6 99.2% 36.3 98.9% Gross Margin (0.5) 33.6 Indirect Costs (4.7) (5.1) Indirect Costs (1.6) (2.2) Indirect Costs (87.7) (76.8) EBITDA 20.1 71.3% 21.6 66.1% EBITDA 37.0 95.1% 34.1 92.9% EBITDA (88.2) (43.2) GX-generated airtime and related revenue in Q1 2019: $85.7m (Q1 2018: $50.0m) 12
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