“Solid start to 2022 with financial outlook and
growth investments on track”
SES S.A. announces financial results
for the three months ended 31 March 2022.
Solid performance delivering revenue of €448 million and
Adjusted EBITDA(1) of €274 million
- Important renewals in Video (-6% YOY(2), -4% YOY excluding US
wholesale) delivering long-term value
- Resilient Networks performance (flat YOY(2)) with Mobility
growth and new Government wins to drive future revenue
- Adjusted Net Profit up 17% to €88 million including the benefit
of lower recurring operating and interest expenses
- 2021 dividend of €0.50 per A-share (+25% YOY) was paid to
shareholders in April 2022
On track to deliver robust 2022 Revenue and EBITDA and drive
long-term value from differentiated growth investments
- Over 85% of 2022 Group Revenue outlook (€1,750-1,810
million(3)) already under contract
- 2022 Adjusted EBITDA(1) outlook (€1,030-1,070 million(3))
reflects robust profitability despite added spend to drive Networks
growth
- $910 million(4) of gross backlog for SES-17 (in service
mid-2022) & O3b mPOWER (service introduction beginning
2023)
- $450 million DRS GES acquisition(5) doubles US government
revenue and profitably expands in a high value, growth segment
Steve Collar, CEO of SES, commented: “We have made a
solid start to 2022 with a strong financial performance supporting
the delivery of our full year 2022 outlook and further execution on
our key strategic goals.
Our Video business continues to deliver long-term value for
customers as demonstrated by the most recent deal announced with
long-term partner Sky UK, valued at around €85 million. We have
continued to see customers transitioning from SD to HD in the
quarter and achieved year-on-year growth of HD+ in Germany. Our
Networks business has performed well, on the back of strong growth
in Mobility and an encouraging volume of wins across Government and
Fixed Data that support our expected uptick in growth.
Looking to our future growth drivers, SES-17 has now reached its
orbital location and will begin commercial services from mid-June
2022. O3b mPOWER is also progressing well with an increased launch
cadence accommodated within our existing CapEx envelope. Commercial
momentum continues to build for these assets with combined gross
backlog up 20% year-on-year.
We are excited by the pending acquisition of DRS Global
Enterprise Solutions, announced in March 2022, doubling our US
Government business, and enabling us to serve US government
customers with an expanded set of connectivity solutions,
leveraging our unique multi-orbit fleet, and in particular the
arrival of O3b mPOWER.
Finally, we are progressing well towards completing the second
phase of US C-band clearing by end-2023 and triggering the
remaining accelerated relocation payment of $3 billion (pre-tax),
while creating a further $170 million in value for SES through our
additional clearing agreement with Verizon.”
Key business and financial highlights (at constant FX unless
explained otherwise)
SES regularly uses Alternative Performance Measures (APM) to
present the performance of the Group and believes that these APMs
are relevant to enhance understanding of the financial performance
and financial position.
€million
Q1 2022
Q1 2021
∆ as reported
∆ at constant FX
Average €/$ FX rate
1.12
1.22
Revenue
448
436
+2.6%
-1.6%
Adjusted EBITDA
274
268
+2.4%
-1.5%
Adjusted Net Profit
88
75
+17.3%
n/a
Adjusted Net Debt / Adjusted
EBITDA
3.1x
3.1x
n/a
n/a
- Underlying revenue (excluding periodic and other) was 3.9%
lower year-on-year at €437 million.
- Video underlying revenue of €251 million represents a reduction
of 6.4% year-on-year including the planned impact of lower US
wholesale revenue. Excluding US wholesale, Video was 4.1% lower
than Q1 2021 as ‘right-sizing’ of volumes in mature European
markets was partially offset by growth in HD+ and Sports &
Events.
- At 31 March 2022, SES delivers 8,164 total TV channels to 366
million TV homes around the world, including 3,054 High Definition
TV channels. Over 70% of total TV channels are broadcast in MPEG-4
with an additional 5% broadcast in HEVC.
- Networks underlying revenue of €186 million was flat compared
with Q1 2021 (-0.3%) with growth in Mobility of +9.9%. The rapid US
withdrawal from Afghanistan in Q3 2021 led to lower Government
(-5.7%) with new wins expected to contribute positively to future
revenue. In Fixed Data (-2.4%), revenue expansion in Asia, Latin
America, and the cloud segment are not yet offsetting a lower
contribution from the Pacific region.
- Adjusted EBITDA of €274 million represented an Adjusted EBITDA
margin of 61.3% (Q1 2021: 61.4%) including a 1.9% reduction in
recurring operating expenses to €173 million. Adjusted EBITDA
excludes US C-band operating expenses (net of reimbursement income)
of €7 million (2021: €7 million) and other significant special
items of €1 million (Q1 2021: €1 million).
- Adjusted Net Profit (as reported) improved to €88 million
including a 23.9% reduction in net interest expense, net foreign
exchange gain of €11 million (Q1 2021: €9 million gain), and income
tax expense of €9 million (Q1 2021: €8 million expense).
- At 31 March 2022, Adjusted Net Debt (including 50% of the
€1.175 billion of hybrid bonds as debt) was €3,442 million and
represented an Adjusted Net Debt to Adjusted EBITDA ratio of 3.1
times.
- Contract backlog at 31 March 2022 was €5.1 billion (€5.7
billion gross backlog including backlog with contractual break
clauses).
- 2021 dividend of €0.50 per A-share and €0.20 per B-share (+25%
year-on-year) was paid to shareholders on 21 April 2022.
- 2022 group revenue and Adjusted EBITDA outlook (assuming an FX
rate of €1=$1.13, nominal satellite health, and nominal launch
schedule) is unchanged and expected to be between €1,750-1,810
million and between €1,030-1,070 million respectively, with low- to
mid-single digit average growth (at constant FX) in group revenue
and Adjusted EBITDA expected from 2023 onwards.
- Capital expenditure (net cash absorbed by investing activities
excluding acquisitions, financial investments, and US C-band
repurposing) is also unchanged and expected to be €950 million in
2022 reflecting growth investments in SES-17 and O3b mPOWER before
reducing to €540 million in 2023, €570 million in 2024, €380
million in 2025, and €360 million in 2026.
- In March 2022, SES secured an agreement to expand access for
Verizon Communications to the 3700-3800 MHz C-band block in certain
US markets beyond those cleared in Phase I and earlier than the
deadline for Phase II clearing. SES will earn additional payments
of up to $170 million (pre-costs), subject to delivering the
clearing on the agreed timeline.
- In March 2022, SES agreed to acquire DRS Global Enterprise
Solutions for $450 million, subject to completion of regulatory
approvals (expected during H2 2022). The acquisition will double
SES revenue in the high value US government business, expand
capabilities and solutions for customers, and unlock annualised
run-rate synergies of $25 million.
Operational performance
REVENUE BY BUSINESS UNIT
Q1 2022
Revenue (€ million) as
reported
Change (YOY) at constant
FX
Average €/$ FX rate
1.12
Video (total)
261
-2.6%
- Video (underlying)
251
-6.4%
- Periodic
10
n/m
Government (underlying)
71
-5.7%
Fixed Data (underlying)
58
-2.4%
Mobility (underlying)
57
+9.9%
Networks (total)
186
-0.3%
- Networks
(underlying)
186
-0.3%
Sub-total
447
-1.7%
- Underlying
437
-3.9%
Other
1
n/m
Group Total
448
-1.6%
“At constant FX” refers to comparative figures restated at the
current period FX to neutralise currency variations. “Underlying”
revenue represents the core business of capacity sales, as well as
associated services and equipment. This revenue may be impacted by
changes in launch schedule and satellite health status. “Periodic”
revenue separates revenues that are not directly related to or
would distort the underlying business trends on a quarterly basis.
Periodic revenue includes: the outright sale of transponders or
transponder equivalents; accelerated revenue from hosted payloads
during construction; termination fees; insurance proceeds; certain
interim satellite missions, and other such items when material.
“Other” includes revenue not directly applicable to Video or
Networks
Future satellite launches
Satellite
Region
Application
Launch Date
SES-22
North America
Video (US C-band accelerated clearing)
Q2 2022
O3b mPOWER (satellites 1-2)
Global
Fixed Data, Mobility, Government
Q3 2022
O3b mPOWER (satellites 3-4)
Global
Fixed Data, Mobility, Government
Q3 2022
O3b mPOWER (satellites 5-6)
Global
Fixed Data, Mobility, Government
Q3 2022
SES-20 & SES-21
North America
Video (US C-band accelerated clearing)
Q3 2022
SES-18 & SES-19
North America
Video (US C-band accelerated clearing)
Q4 2022
O3b mPOWER (satellites 7-9)
Global
Fixed Data, Mobility, Government
Q4 2022
O3b mPOWER (satellites 10-11)
Global
Fixed Data, Mobility, Government
2024
ASTRA 1P
Europe
Video
2024
ASTRA 1Q
Europe
Video, Fixed Data, Mobility,
Government
2024
SES-26
Africa, Asia, Europe, Middle East
Video, Fixed Data, Mobility,
Government
2024
CONSOLIDATED INCOME STATEMENT
Three months ended 31 March
€ million
Q1 2022
Q1 2021
Average €/$ FX rate
1.12
1.22
Revenue
448
436
US C-band repurposing income
2
27
Operating expenses
(184)
(203)
EBITDA
266
260
Depreciation expense
(147)
(140)
Amortisation expense
(12)
(19)
Operating profit
107
101
Net financing costs
(16)
(26)
Profit before tax
91
75
Income tax expense
(9)
(8)
Non-controlling interests
-
2
Net profit attributable to
owners of the parent
82
69
Basic earnings per A-share (in
€)(1)
0.17
0.13
Basic earnings per B-share (in
€)(1)
0.07
0.05
Diluted earnings per A-share
(in €)(1)
0.16
0.13
Diluted earnings per B-share (in
€)(1)
0.07
0.05
1) Earnings per share is calculated as profit attributable to
owners of the parent divided by the weighted average number of
shares outstanding during the year, as adjusted to reflect the
economic rights of each class of share. For the purposes of the EPS
calculation only, the net profit for the year attributable to
ordinary shareholders has been adjusted to include the assumed
coupon, net of tax, on the perpetual bonds.
€ million
2022
2021
Adjusted EBITDA
274
268
US C-band reimbursement
income
2
27
US C-band operating expenses
(9)
(34)
Other significant special
items
(1)
(1)
EBITDA
266
260
€ million
2022
2021
Adjusted Net Profit
88
75
US C-band reimbursement
income
2
27
US C-band operating expenses
(9)
(34)
Other significant special
items
(1)
(1)
Tax impact
2
2
Net profit attributable to
owners of the parent
82
69
SUPPLEMENTARY INFORMATION
QUARTERLY INCOME STATEMENT (AS REPORTED)
€ million
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Average €/$ FX rate
1.22
1.20
1.19
1.15
1.12
Revenue
436
439
444
463
448
US C-band repurposing income
27
20
10
844
2
Operating expenses
(203)
(193)
(182)
(243)
(184)
EBITDA
260
266
272
1,064
266
Depreciation expense
(140)
(143)
(143)
(149)
(147)
Amortisation expense
(19)
(29)
(24)
(23)
(12)
Impairment expense
-
-
-
(724)
-
Operating profit
101
94
105
168
107
Net financing costs
(26)
(18)
(23)
(4)
(16)
Profit before tax
75
76
82
164
91
Income tax benefit/(expense)
(8)
(8)
(14)
79
(9)
Non-controlling interests
2
-
-
5
-
Net Profit
69
68
68
248
82
Basic earnings per share (in
€)(1)
Class A shares
0.13
0.12
0.14
0.53
0.17
Class B shares
0.05
0.05
0.05
0.22
0.07
Adjusted EBITDA
268
276
279
268
274
Adjusted EBITDA margin
61%
63%
63%
58%
61%
US C-band repurposing income
27
20
10
844
2
US C-band operating expenses
(34)
(25)
(16)
(47)
(9)
Other significant special
items
(1)
(5)
(1)
(1)
(1)
EBITDA
260
266
272
1,064
266
1) Earnings per share is calculated as profit attributable to
owners of the parent divided by the weighted average number of
shares outstanding during the year, as adjusted to reflect the
economic rights of each class of share. For the purposes of the EPS
calculation only, the net profit for the year attributable to
ordinary shareholders has been adjusted to include the coupon, net
of tax, on the perpetual bonds. Fully diluted earnings per share
are not significantly different from basic earnings per share.
QUARTERLY OPERATING PROFIT (AT CONSTANT €/$ FX RATE OF €1:
$1.13)
€ million
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Average €/$ FX rate
1.13
1.13
1.13
1.13
1.13
Revenue
454
452
455
468
446
US C-band repurposing income
29
21
11
861
2
Operating expenses
(213)
(199)
(187)
(246)
(182)
EBITDA
270
274
279
1,083
266
Depreciation expense
(149)
(150)
(149)
(154)
(147)
Amortisation expense
(19)
(30)
(23)
(23)
(12)
Impairment expense
-
-
-
(739)
-
Operating profit
102
94
107
167
107
Adjusted EBITDA
278
285
286
271
274
Adjusted EBITDA margin
61%
63%
63%
58%
61%
US C-band repurposing income
29
21
11
861
2
US C-band operating expenses
(36)
(27)
(17)
(48)
(9)
Other significant special
items
(1)
(5)
(1)
(1)
(1)
EBITDA
270
274
279
1,083
266
ALTERNATIVE PERFORMANCE MEASURES
SES regularly uses Alternative Performance Measures (‘APM’) to
present the performance of the Group and believes that these APMs
are relevant to enhance understanding of the financial performance
and financial position. These measures may not be comparable to
similarly titled measures used by other companies and are not
measurements under IFRS or any other body of generally accepted
accounting principles, and thus should not be considered
substitutes for the information contained in the Group’s financial
statements.
Alternative Performance Measure
Definition
Reported EBITDA and EBITDA
margin
EBITDA is profit for the period
before depreciation, amortisation, net financing cost and income
tax. EBITDA margin is EBITDA divided by revenue.
Adjusted EBITDA and Adjusted EBITDA
margin
EBITDA adjusted to exclude
significant special items. In 2021 and 2022, the primary
exceptional items are the net impact of the repurposing of US
C-band spectrum, restructuring charges, and costs associated with
the acquisition and integration of new subsidiaries. Adjusted
EBITDA margin is Adjusted EBITDA divided by revenue.
Adjusted Net Debt to Adjusted
EBITDA
Adjusted Net Debt to Adjusted
EBITDA, represents the ratio of Net Debt plus 50% of the group’s
hybrid bonds (per the rating agency methodology) divided by the
last 12 months’ (rolling) Adjusted EBITDA.
Adjusted Net Profit
Net profit attributable to owners
of the parent adjusted to exclude the
After tax impact of significant
special items.
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Presentation of Results:
A presentation of the results for investors and analysts will be
hosted at 9.30 CEST on 5 May 2022 and will be broadcast via webcast
and conference call. The details for the conference call and
webcast are as follows:
U.K. (Standard International
Access):
+44 (0) 33 0551 0200
France:
+33 (0) 1 70 37 71 66
Germany:
+49 (0) 30 3001 90612
NL:
+31 (0) 20 708 5073
U.S.A.:
+1 212 999 6659
Confirmation code:
SES
Webcast registration:
https://channel.royalcast.com/landingpage/ses/20220505_1/
The presentation is available for download from
https://www.ses.com/investors/financial-results and a replay will
be available shortly after the conclusion of the presentation.
About SES
SES has a bold vision to deliver amazing experiences everywhere
on earth by distributing the highest quality video content and
providing seamless connectivity around the world. As the leader in
global content connectivity solutions, SES operates the world’s
only multi-orbit constellation of satellites with the unique
combination of global coverage and high performance, including the
commercially proven, low latency Medium Earth Orbit O3b system. By
leveraging a vast and intelligent, cloud-enabled network, SES is
able to deliver high quality connectivity solutions anywhere on
land, at sea or in the air, and is a trusted partner to the world’s
leading telecommunications companies, mobile network operators,
governments, connectivity and cloud service providers,
broadcasters, video platform operators and content owners. SES’s
video network carries 8,400 channels and has an unparalleled reach
of 366 million households, delivering managed media services for
both linear and non-linear content. The company is listed on Paris
and Luxembourg stock exchanges (Ticker: SESG). Further information
is available at: www.ses.com.
Disclaimer
This presentation does not, in any jurisdiction, including
without limitation in the U.S., constitute or form part of, and
should not be construed as, any offer for sale of, or solicitation
of any offer to buy, or any investment advice in connection with,
any securities of SES, nor should it or any part of it form the
basis of, or be relied on in connection with, any contract or
commitment whatsoever.
No representation or warranty, express or implied, is or will be
made by SES, its directors, officers or advisors, or any other
person, as to the accuracy, completeness or fairness of the
information or opinions contained in this presentation, and any
reliance you place on them will be at your sole risk. Without
prejudice to the foregoing, none of SES, or its directors, officers
or advisors accept any liability whatsoever for any loss however
arising, directly or indirectly, from use of this presentation or
its contents or otherwise arising in connection therewith.
This presentation includes “forward-looking statements”. All
statements other than statements of historical fact included in
this presentation, including without limitation those regarding
SES’s financial position, business strategy, plans and objectives
of management for future operations (including development plans
and objectives relating to SES products and services), are
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors
that could cause the actual results, performance, or achievements
of SES to be materially different from future results, performance
or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding SES and its subsidiaries and affiliates,
present and future business strategies, and the environment in
which SES will operate in the future, and such assumptions may or
may not prove to be correct. These forward-looking statements speak
only as at the date of this presentation. Forward-looking
statements contained in this presentation regarding past trends or
activities should not be taken as a representation that such trends
or activities will occur or continue in the future. SES, and its
directors, officers and advisors do not undertake any obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
1 Excluding operating expenses/income recognised in relation to
US C-band repurposing and other significant special items
(disclosed separately) 2 Underlying revenue (at constant FX which
refers to comparative figures restated to neutralise currency
variations), excluding periodic and other revenue (disclosed
separately) that are not directly related to or otherwise distort
the underlying business trends 3 Financial outlook assumes a €/$ FX
rate of €1 = $1.13, nominal satellite health, and nominal launch
schedule 4 Gross backlog over $910 million (fully protected: $675
million) 5 Subject to completion of regulatory approvals (expected
to be completed during H2 2022)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504006200/en/
Richard Whiteing Investor Relations Tel: +352 710 725 261
richard.whiteing@ses.com
Suzanne Ong External Communications Tel: +352 710 725 500
suzanne.ong@ses.com
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