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Last updated on April 25, 2014 at 1:22 EDT

ViaSat Announces Third Quarter Fiscal Year 2013 Results

February 6, 2013

CARLSBAD, Calif., Feb. 6, 2013 /PRNewswire/ — ViaSat Inc. (NASDAQ: VSAT), an innovator in satellite and other wireless networking systems and services, announced financial results for the third quarter of fiscal year 2013. The fiscal third quarter results included new contract awards of $265.7 million and another record revenues quarter of $286.4 million. Operating performance grew quarter over quarter reflecting Adjusted EBITDA of $48.4 million and net income attributable to ViaSat common stockholders of $0.04 per share on a non-GAAP diluted basis. On a diluted GAAP basis, ViaSat reported a net loss attributable to ViaSat common stockholders of $0.47 per share, which, as discussed below, reflects a one-time debt extinguishment expense of $26.5 million or $0.36 per share on a net of tax basis.

(Logo: http://photos.prnewswire.com/prnh/20091216/VIASATLOGO)

Results for the past nine months include new contract awards of over $1.1 billion and revenues totaling $811.0 million. On a year-to-date basis, ViaSat reported Adjusted EBITDA of $122.5 million and a net loss attributable to ViaSat common stockholders of $0.18 per share on a non-GAAP diluted basis, or $0.99 per share on a diluted GAAP basis inclusive of the debt extinguishment expense.

“Our fiscal third quarter delivered strong growth in key metrics for all our business segments. We gained more momentum in our Exede® satellite broadband service, growing net adds over 50% sequentially to almost 38,000 for the quarter, while yielding continued sequential growth in Adjusted EBITDA,” said Mark Dankberg, chairman and CEO of ViaSat. “Our Government Systems segment posted record revenues and over 70% Adjusted EBITDA growth, along with solid orders. Our Commercial Networks segment revenues are up over 25%, driven by Ka-band network systems. We are very pleased with these results that reflect the strong backlog and competitive positions that we are continuing to build throughout the company.”

Financial Results(1)

     (In
     millions,
     except
     per
     share
     data)     Q3 FY13         Q3 FY12        First 9 Mos. FY13      First 9 Mos. FY12
     --------- -------         -------        -----------------      -----------------
    Revenues           $286.4          $205.0                $811.0               $623.1
    --------           ------          ------                ------               ------
     Adjusted
     EBITDA(2)          $48.4           $36.9                $122.5               $112.1
     ---------          -----           -----                ------               ------
     Net
     (loss)
     income(3)         ($20.8)           $5.1                ($43.1)               $14.9
     ---------         ------            ----                ------                -----
     Diluted
     per
     share
     net
     (loss)
     income
     (3)               ($0.47)          $0.12                ($0.99)               $0.34
     -------           ------           -----                ------                -----
     Non-
     GAAP
     net
     income
     (loss)
     3,4                 $1.8           $11.6                 ($7.9)               $32.7
     ------              ----           -----                 -----                -----
     Non-
     GAAP
     diluted
     per
     share
     net
     income
     (loss)
     3,4                $0.04           $0.26                ($0.18)               $0.74
     -------            -----           -----                ------                -----
     Fully
     diluted
     weighted
     average
     shares
     5                   44.2            44.3                  43.7                 44.0
     --------            ----            ----                  ----                 ----

     New
     contract
     awards            $265.7          $211.9              $1,146.3               $711.2
     --------          ------          ------              --------               ------
     Sales
     backlog6          $939.0          $575.3                $939.0               $575.3
     --------          ------          ------                ------               ------
    1 ViaSat uses a 52 or 53 week fiscal
     year which ends on the Friday closest
     to March 31. ViaSat quarters for
     fiscal year 2013 end on June 29,
     2012, September 28, 2012, December
     28, 2012, and March 29, 2013.

    2 Adjusted EBITDA represents net
     income (loss) attributable to ViaSat
     Inc. before interest, taxes,
     depreciation and amortization,
     adjusted to exclude the effects of
     non-cash stock-based compensation
     expense, acquisition related expenses
     and loss on extinguishment of debt. A
     reconciliation of specific
     adjustments to GAAP results for these
     periods is included in the tables
     below.

    3 Attributable to ViaSat Inc. common
     stockholders.

    4 All non-GAAP net income (loss)
     numbers have been adjusted to exclude
     the effects of amortization of
     acquired intangible assets,
     acquisition related expenses, non-
     cash stock-based compensation
     expenses and loss on extinguishment
     of debt, net of tax. A reconciliation
     of specific adjustments to GAAP
     results for these periods is included
     in the tables below.

    5 As the third quarter and first nine
     months of fiscal year 2013 financial
     information results 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.

    6 Amounts include certain backlog
     adjustments due to contract changes
     and amendments.

Segment Results

    (In millions)   Q3 FY13        Q3 FY12       First 9 Mos. FY13   First 9 Mos. FY12
    ------------  -------        -------         -----------------   -----------------
    Satellite
     Services
    ---------
     New contract
      awards               $71.4          $55.7               $212.5              $167.5
     ------------          -----          -----               ------              ------
     Revenues              $71.8          $55.7               $198.4              $167.9
     --------              -----          -----               ------              ------
     Adjusted
      EBITDA               $11.0          $17.3                $24.1               $54.8
     --------              -----          -----                -----               -----

    Commercial
     Networks
    ----------
     New contract
      awards               $45.8          $41.9               $417.7              $207.7
     ------------          -----          -----               ------              ------
     Revenues              $68.7          $54.4               $231.3              $170.7
     --------              -----          -----               ------              ------
     Adjusted
      EBITDA                $2.4          ($0.1)               $10.9                $3.2
     --------               ----          -----                -----                ----

    Government
     Systems
    ----------
     New contract
      awards              $148.5         $114.3               $516.1              $336.0
     ------------         ------         ------               ------              ------
     Revenues             $146.0          $94.9               $381.3              $284.4
     --------             ------          -----               ------              ------
     Adjusted
      EBITDA               $35.1          $19.8                $87.7               $54.0
     --------              -----          -----                -----               -----

Satellite Services

Our Satellite Service segment revenues increased 28.9% for the quarter and 18.1% year-to-date as our total subscriber base expanded to 467,000. We completed approximately 77,500 installations during the quarter, which delivered 62,000 gross adds to the network, primarily through retail channels. ARPU increased to $49.07 for the third quarter. Adjusted EBITDA declined for the quarter and year-to-date compared to last year primarily due to the fixed costs of the ViaSat-1 network expansion and higher subscriber acquisition costs relative to the incremental subscriber margin gains. However, quarter over quarter Adjusted EBITDA improved for the second consecutive quarter.

  • Our third quarter consumer Internet service reported other key metrics as follows:

    • Ending subscribers: 467,000 (46.4% on ViaSat-1)
    • Migrations from WildBlue® to Exede service: 15,600 (77,500 installs, less 62,000 gross adds)
    • Average monthly churn: 1.9%

Commercial Networks

Our Commercial Networks segment third quarter revenues of $68.7 million grew by 26.1% compared to last year, driving Adjusted EBITDA up to $2.4 million versus the $0.1 million Adjusted EBITDA loss reported in our fiscal 2012 third quarter results. Year-to-date revenues and Adjusted EBITDA also grew compared to last year, reflecting the continued success we have experienced in the global Ka-band satellite networking market. In the third quarter, we received another $19.9 million in awards for SurfBeam® 2 Ka-band terminals and recently reached a significant milestone as we shipped our 500,000(th) SurfBeam 2 consumer terminal.

Government Systems

Our Government Systems segment reported another quarter of record revenues and Adjusted EBITDA improving year over year by 53.9% and 77.4%, respectively. On a year-to-date basis, our government segment has experienced nearly $100 million in revenue growth driving Adjusted EBITDA up 62.5% compared to the same period last year. These results have been driven by growth in our government mobile broadband, command and control, and tactical satellite networks products and services. In December 2012, we received a $52 million contract renewal to continue providing broadband airborne satcom services for a U.S. government customer and were selected by the U.S. Marine Corps Systems Command to engineer our advanced information security into common, off-the-shelf mobile devices, such as smartphones and tablets.

Other Selected Fiscal Third Quarter Business Highlights

  • Named by Popular Science as a Best of What’s New Award winner for 2012 for the ViaSat-1 high-capacity satellite system and Exede Internet service for the home.
  • Ranked number 25 on the Defense Systems “Super 75,” which recognizes the most successful and agile 75 companies supplying products and systems in the net-centric battlespace.
  • CEO Mark Dankberg named Visionary Executive of the Year at the first annual Satellite Markets and Research Vision Awards in New York City.
  • Completed field testing of the Exede Newsgathering service, including the first high-capacity Ka-band Satellite Newsgathering (SNG) vehicle built in the U.S., with ABC TV stations in Chicago and Houston.
  • Awarded a $13 million delivery order for Multifunctional Information Distribution System-Low Volume Terminals (MIDS-LVTs) from the Space and Naval Warfare Systems Command (SPAWAR), San Diego, augmenting the original $34 million Lot 13 order.
  • Shipped our 500(th) VR-12 Ku-band airborne satellite antenna, which has been the workhorse for hundreds of military and general aviation customers.
  • Issued an additional $300 million in aggregate principal amount of our 6.875% Senior Notes due 2020. The net proceeds from the notes offering were used primarily to repurchase our outstanding 8.875% Senior Notes due 2016. Upon completion of the refinancing transaction in the third quarter, the company recorded a one-time debt extinguishment expense of $26.5 million related to the early repayment of the old notes, and simultaneously lowered its annual effective interest expense by approximately $5 million per year over the eight-year term of the new notes.

Safe Harbor Statement

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 strong backlog, competitive positions and continued growth of the company. 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 successfully implement our business plan for our broadband satellite services on our anticipated timeline or at all; negative audits by the U.S. government; continued turmoil 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; our ability to successfully develop, introduce and sell new technologies, products and services; reduced demand for products 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 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 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.

Conference Call

ViaSat Inc. will host a conference call to discuss the fiscal year 2013 third quarter results at 5:00 p.m. Eastern Time on Wednesday, February 6, 2013. The dial-in number is (877) 640-9809 in the U.S. and (914) 495-8528 internationally. A replay of the conference call will be available from 8:00 p.m. Eastern Time on Wednesday, February 6 until midnight on Thursday, February 7 by dialing (855) 859-2056 for U.S. callers and (404) 537-3406 for international callers, and entering the conference ID 93800126. You can also access our conference call webcast and other material financial information discussed on our conference call on the Investor Relations section of our website at investors.viasat.com. The call will be archived and available on that site for approximately one month immediately following the conference call.

About ViaSat (www.viasat.com)

ViaSat delivers fast, secure communications, Internet, and network access to virtually any location for consumers, governments, enterprise, and the military. The company offers fixed and mobile satellite network services including Exede by ViaSat, which features ViaSat-1, the world’s highest capacity satellite; service to more than 1,750 mobile platforms, including Yonder(®) Ku-band mobile service; satellite broadband networking systems; and network-centric military communication systems and cybersecurity products for the U.S. and allied governments. ViaSat also offers communication system design and a number of complementary products and technologies. Based in Carlsbad, California, ViaSat employs over 2,600 people in a number of locations worldwide for customer service, network operations, and technology development.

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.

WildBlue, Exede, Yonder, and SurfBeam are registered trademarks and service marks of ViaSat Inc.

                                                                                     Condensed Consolidated Statement of Operations
                                                                                                      (Unaudited)
                                                                                         (In thousands, except per share data)

                                                    Three months ended                       Nine months ended
                                                    ------------------                       -----------------
                                                       December 28,                             December 30,                           December 28,                December 30,
                                                                           2012                                     2011                                  2012                        2011
                                                                           ----                                     ----                                  ----                        ----

    Revenues:
    Product revenues                                                   $164,694                                 $121,862                              $480,898                    $391,019
    Service revenues                                                    121,748                                   83,102                               330,129                     232,070
                                                                        -------                                   ------                               -------                     -------
    Total revenues                                                      286,442                                  204,964                               811,027                     623,089

    Operating expenses:
    Cost of product
     revenues                                                           119,250                                   89,463                               349,720                     289,657
    Cost of service
     revenues                                                            92,145                                   57,318                               266,096                     160,838
    Selling, general and
     administrative                                                      62,209                                   45,640                               172,789                     131,752
    Independent research
     and development                                                      7,612                                    5,999                                23,739                      18,502
    Amortization of
     acquired intangible
     assets                                                               3,960                                    4,752                                12,065                      14,291
    Income (Loss) from
     operations                                                           1,266                                    1,792                               (13,382)                      8,049
    Interest expense, net                                               (10,634)                                    (311)                              (33,628)                       (483)
    Loss on
     extinguishment of
     debt                                                               (26,501)                                       -                               (26,501)                          -
                                                                        -------                                      ---                               -------                         ---
    (Loss) income before
     income taxes                                                       (35,869)                                   1,481                               (73,511)                      7,566
    Benefit from income
     taxes                                                              (15,255)                                  (3,637)                              (30,607)                     (7,315)
                                                                        -------                                   ------                               -------                      ------
    Net (loss) income                                                   (20,614)                                   5,118                               (42,904)                     14,881
    Less: Net income
     (loss) attributable
     to the
     noncontrolling
     interest, net of tax                                                   162                                      (22)                                  199                           7
    Net (loss) income
     attributable to
     ViaSat Inc.                                                       $(20,776)                                  $5,140                              $(43,103)                    $14,874
                                                                       ========                                   ======                              ========                     =======

    Diluted net (loss)
     income per share
     attributable to
     ViaSat Inc. common
     stockholders                                                        $(0.47)                                   $0.12                                $(0.99)                      $0.34
                                                                         ======                                    =====                                ======                       =====
    Diluted common
     equivalent shares                                                   44,189                                   44,333                                43,662                      44,015

    AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.
    ON A GAAP BASIS AND NON-GAAP BASIS IS AS FOLLOWS:
                                                    Three months ended                       Nine months ended
                                                    ------------------                       -----------------
                                                    December 28, 2012                        December 30, 2011                      December 28, 2012           December 30, 2011
                                                    -----------------                        -----------------                      -----------------           -----------------

    GAAP net (loss)
     income attributable
     to ViaSat Inc.                                                    $(20,776)                                  $5,140                              $(43,103)                    $14,874
    Amortization of
     acquired intangible
     assets                                                               3,960                                    4,752                                12,065                      14,291
    Stock-based
     compensation expense                                                 6,986                                    5,799                                19,410                      14,778
    Loss on
     extinguishment of
     debt                                                                26,501                                        -                                26,501                           -
    Income tax effect                                                   (14,829)                                  (4,085)                              (22,729)                    (11,245)
    Non-GAAP net income
     (loss) attributable
     to ViaSat Inc.                                                      $1,842                                  $11,606                               $(7,856)                    $32,698
                                                                         ======                                  =======                               =======                     =======
    Non-GAAP diluted net
     income (loss) per
     share attributable
     to ViaSat Inc.
     common stockholders                                                  $0.04                                    $0.26                                $(0.18)                      $0.74
                                                                          =====                                    =====                                ======                       =====
    Diluted common
     equivalent shares                                                   44,189                                   44,333                                43,662                      44,015

    AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.
    AND ADJUSTED EBITDA IS AS FOLLOWS:
                                                    Three months ended                       Nine months ended
                                                    ------------------                       -----------------
                                                    December 28, 2012                        December 30, 2011                      December 28, 2012           December 30, 2011
                                                    -----------------                        -----------------                      -----------------           -----------------

    GAAP net (loss)
     income attributable
     to ViaSat Inc.                                                    $(20,776)                                  $5,140                              $(43,103)                    $14,874
    Benefit from income
     taxes                                                              (15,255)                                  (3,637)                              (30,607)                     (7,315)
    Interest expense, net                                                10,634                                      311                                33,628                         483
    Depreciation and
     amortization                                                        40,324                                   29,331                               116,717                      89,238
    Stock-based
     compensation expense                                                 6,986                                    5,799                                19,410                      14,778
    Loss on
     extinguishment of
     debt                                                                26,501                                        -                                26,501                           -
    Adjusted EBITDA                                                     $48,414                                  $36,944                              $122,546                    $112,058
                                                                        =======                                  =======                              ========                    ========

    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 28, 2012                                         Three months ended December 30, 2011
                                                 ------------------------------------                                         ------------------------------------
                                                     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                                             $(18,356)                                     $(3,399)                              $26,981             $5,226                 $(1,359)                    $(5,159)                    $13,062         $6,544
    Depreciation *                                                   27,009                                        2,451                                 5,178             34,638                  17,341                       2,345                       4,076         23,762
    Stock-based
     compensation
     expense                                                          1,460                                        2,653                                 2,873              6,986                   1,042                       2,111                       2,646          5,799
    Other amortization                                                  934                                          740                                    55              1,729                     251                         568                           -            819
                                                                        ---                                          ---                                   ---              -----                     ---                         ---                         ---            ---
    Adjusted EBITDA
     before other                                                   $11,047                                       $2,445                               $35,087             48,579                 $17,275                       $(135)                    $19,784         36,924
                                                                    =======                                       ======                               =======                                    =======                       =====                     =======
    Other                                                                                                                                                                    (165)                                                                                            20
                                                                                                                                                                             ----                                                                                            ---
    Adjusted EBITDA                                                                                                                                                       $48,414                                                                                        $36,944
                                                                                                                                                                          =======                                                                                        =======

                                                 Nine months ended December 28, 2012                                      Nine months ended December 30, 2011
                                                 -----------------------------------                                      -----------------------------------
                                                     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                                             $(60,245)                                     $(7,304)                              $66,232            $(1,317)                $(1,165)                   $(11,270)                    $34,775        $22,340
    Depreciation *                                                   77,607                                        8,076                                13,314             98,997                  52,145                       7,358                      12,259         71,762
    Stock-based
     compensation
     expense                                                          4,093                                        7,265                                 8,052             19,410                   2,989                       4,820                       6,969         14,778
    Other amortization                                                2,662                                        2,815                                   143              5,620                     855                       2,331                           -          3,186
                                                                      -----                                        -----                                   ---              -----                     ---                       -----                         ---          -----
    Adjusted EBITDA
     before other                                                   $24,117                                      $10,852                               $87,741            122,710                 $54,824                      $3,239                     $54,003        112,066
                                                                    =======                                      =======                               =======                                    =======                      ======                     =======
    Other                                                                                                                                                                    (164)                                                                                            (8)
                                                                                                                                                                             ----                                                                                            ---
    Adjusted EBITDA                                                                                                                                                      $122,546                                                                                       $112,058
                                                                                                                                                                         ========                                                                                       ========
    * Depreciation expenses not specifically recorded in a particular segment have been allocated based on sales,
     which management believes is a reasonable method.

                                                              Condensed Consolidated Balance Sheet
                                                                          (Unaudited)
                                                                         (In thousands)

                         As of                 As of                                                                 As of                   As of
    Assets         December 28, 2012       March 30, 2012                  Liabilities and Equity              December 28, 2012        March 30, 2012
                   -----------------       --------------                                                      -----------------        --------------

    Current
     assets:                                                                Current liabilities:
    Cash and cash
     equivalents                  $112,667               $172,583           Accounts payable                                    $76,930                 $75,040
    Accounts
     receivable,
     net                           237,551                211,690           Accrued liabilities                                 139,547                 159,762
    Inventories                    126,437                127,646           Current portion of other long-term
                                                                             debt                                                 1,027                   1,240
                                                                                                                                  -----                   -----
    Deferred
     income taxes                   20,214                 20,316           Total current liabilities                           217,504                 236,042
    Prepaid
     expenses and
     other current
     assets                         36,663                 30,917           Senior Notes, net                                   585,265                 547,791
    Total current
     assets                        533,532                563,152           Other long-term debt                                     62                     774
                                                                            Other liabilities                                    58,039                  50,353
                                                                                                                                 ------                  ------
    Property,
     equipment and
     satellites,
     net                           895,535                880,704           Total liabilities                                   860,870                 834,960
                                                                                                                                -------                 -------
    Other acquired                                                          Total ViaSat Inc. stockholders'
     intangible                                                              equity
     assets, net                    51,069                 63,041                                                               883,599                 887,975
    Goodwill                        83,561                 83,461           Noncontrolling interest in
                                                                             subsidiary                                           4,466                   4,218
                                                                                                                                  -----                   -----
    Other assets                   185,238                136,795           Total equity                                        888,065                 892,193
                                                                                                                                -------                 -------
    Total assets                $1,748,935             $1,727,153           Total liabilities and equity                     $1,748,935              $1,727,153
                                ==========             ==========                                                            ==========              ==========

SOURCE ViaSat Inc.


Source: PR Newswire