VSAT
$66.18
Viasat
($.71)
(1.06%)
Earnings Details
4th Quarter March 2017
Tuesday, May 23, 2017 4:05:00 PM
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Summary

Viasat Beats

Viasat (VSAT) reported 4th Quarter March 2017 earnings of $0.42 per share on revenue of $416.4 million. The consensus earnings estimate was $0.28 per share on revenue of $398.9 million. The Earnings Whisper number was $0.29 per share. Revenue grew 12.0% on a year-over-year basis.

Viasat Inc is engaged in the provision of high-speed fixed and mobile broadband services. The Company also offers advanced satellite and other wireless networks and secure networking systems, products and services.

Results
Reported Earnings
$0.42
Earnings Whisper
$0.29
Consensus Estimate
$0.28
Reported Revenue
$416.4 Mil
Revenue Estimate
$398.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ViaSat Announces Fourth Quarter and Fiscal Year 2017 Results

ViaSat Inc. (VSAT), a global broadband services and technology company, today announced financial results for the fiscal fourth quarter ended March 31, 2017.

"Our strong fourth quarter wrapped up a fiscal year that featured multiple performance records including revenue, cash flow from operations and new contract awards," said Mark Dankberg, chairman and CEO of ViaSat. "Performance for both the quarter and full fiscal year were driven by our satellite services operations across the residential, aero and government mobility markets, and outstanding results from our government business, where we are capitalizing on our unique market position and capabilities. With our ViaSat-2 launch scheduled for June 1, we are poised to again set a new benchmark for low-cost bandwidth delivery and we’re making great progress with R&D investments in the ViaSat-3 program. Our strategy is simple: we want to lead the way with the highest speeds and the most bandwidth at the lowest total cost, an approach that will continue to redefine global bandwidth economics and open significant opportunities for ViaSat to disrupt multiple markets."

Financial Results
(In millions, except per share data)
Q4 FY17
Q4 FY16 Year-Over- FY17
FY16
Year-
Year
Over-Year
Change
Change
Revenues
$ 416.4
$ 372.0 12.0%
$ 1,559.3 $ 1,417.4 10.0%
Net income1
$ 6.7
$ 4.5
49.4%
$ 23.8
$ 21.7
9.3%
Non-GAAP net income1
$ 18.5
$ 14.3
29.3%
$ 65.6
$ 61.0
7.5%
Adjusted EBITDA
$ 83.5
$ 80.7
3.5%
$ 340.8
$ 330.7
3.1%
Diluted per share net income1
$ 0.11
$ 0.09
22.2%
$ 0.45
$ 0.44
2.3%
Non-GAAP diluted per share net income1 $ 0.32
$ 0.29
10.3%
$ 1.23
$ 1.23
0.0%
Fully diluted weighted average shares
58.4
49.8
17.4%
53.4
49.4
8.0%
New contract awards
$ 385.6
$ 451.2 (14.5)%
$ 1,661.7 $ 1,483.3 12.0%
Sales backlog2,5
$ 1,024.4 $ 941.9 8.8%
$ 1,024.4 $ 941.9
8.8%
Segment Results
(In millions)
Q4 FY17
Q4 FY16
Year-Over- FY17
FY16
Year-
Year
Over-Year
Change
Change
Satellite Services
New contract awards $ 153.0
$ 135.2
13.2%
$ 597.2
$ 511.1
16.8%
Revenues
$ 160.9
$ 145.4
10.6%
$ 629.6
$ 559.2
12.6%
Operating profit3
$ 32.8
$ 22.0
49.3%
$ 131.1
$ 81.8
60.2%
Adjusted EBITDA
$ 75.0
$ 63.7
17.9%
$ 297.4
$ 243.7
22.1%
Commercial Networks
New contract awards $ 51.3
$ 74.6
(31.3)%
$ 213.8
$ 228.0
(6.3)%
Revenues
$ 59.1
$ 62.2
(5.0)%
$ 244.6
$ 250.7
(2.4)%
Operating loss3
$ (52.5) $ (40.4) (29.9)%
$ (180.5) $ (111.3) (62.1)%
Adjusted EBITDA
$ (36.5) $ (26.6) (37.4)%
$ (119.0) $ (56.5)
(110.4)%
Government Systems
New contract awards $ 181.3
$ 241.4
(24.9)%
$ 850.7
$ 744.2
14.3%
Revenues
$ 196.5
$ 164.4
19.5%
$ 685.1
$ 607.5
12.8%
Operating profit 3
$ 25.6
$ 28.7
(10.9)%
$ 96.7
$ 87.1
11.0%
Adjusted EBITDA4
$ 45.0
$ 43.6
3.1%
$ 162.3
$ 143.6
13.1%
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.
4 Government Systems’ segment Adjusted EBITDA for the fourth quarter and fiscal year ended March 31, 2016 has been adjusted to exclude noncontrolling interest, net of tax.
5 Backlog does not include anticipated equipment purchase orders or future recurring internet service revenues under commercial in-flight internet agreements, nor does it include contracts with ViaSat’s residential broadband internet subscribers.

Satellite Services ViaSat’s Satellite Services segment achieved strong growth in the fourth quarter of fiscal year 2017 driven primarily by its diverse broadband service offerings, generating an 11% year-over-year revenue increase to a new record high of $160.9 million. Operating profit and Adjusted EBITDA both grew faster than revenue, as operating profit grew significantly, rising 49% to $32.8 million and Adjusted EBITDA increased 18% to $75.0 million. Fiscal 2017 fourth quarter Adjusted EBITDA margins also remained high at 47%, up from 44% in the same quarter last year. Highlights for the quarter include:

Continued interest in premium, higher bandwidth broadband internet plans, plus growth in value-added services continued to drive gains in the residential broadband business, with an Average Revenue Per User (ARPU) of $66.02, up 13% year-over-year. This increase more than offset the effects of the slight decrease in the number of residential subscribers, which totaled approximately 659,000 subscribers at the close of fiscal year 2017.

On March 3, 2017, ViaSat and Eutelsat Communications closed their European broadband strategic partnering arrangement, with ViaSat acquiring a 49% interest in Eutelsat’s wholesale services business for $139.5 million. A second entity, which is 51% owned by ViaSat, will focus on providing retail broadband internet services in the European region.

In-flight connectivity business grew strongly with in-flight internet services now deployed on 559 commercial aircraft as of March 31, 2017, which was approximately 85 more aircraft than the end of fiscal year 2016.

Now covering more than 90% of the world’s most frequently traveled flight paths, ViaSat’s in-flight internet services business continued to expand globally. Following the close of fiscal year 2017, ViaSat had more than 830 commercial aircraft in install backlog.

-- Specific to commercial airline customers:

JetBlue announced it became the only airline to offer free, high-speed Wi-Fi at every seat - using ViaSat’s in-flight internet service.

Subsequent to the 2017 fiscal year end, Qantas held the first high-speed, high-performance connectivity media flight in Australia; marking a successful trial for ViaSat and partner, nbn(TM).

Following the close of fiscal year 2017, ViaSat announced Icelandair as the first airline to bring high-speed connectivity and internet streaming to transatlantic flights using ViaSat’s in-flight internet system.

Fiscal 2017 Satellite Services segment results also reflected multiple record highs, with revenue growth of 13% to $629.6 million, an operating profit increase of 60% year-over-year to $131.1 million and Adjusted EBITDA of $297.4 million, up 22% over the same period last year.

Commercial Networks In the fiscal fourth quarter of 2017, ViaSat’s Commercial Networks segment activities were heavily focused on the Company’s ViaSat-3 project, a next-generation satellite platform designed to deliver over 1 Terabit per second (Tbps) of high throughput Ka-band broadband capacity. These anticipated ViaSat-3 investments coupled with next-gen mobility solutions and supplement type certificate (STC) activities supporting recent commercial airline wins, drove R&D expenses up year-over-year by 77%. Additionally, quarterly revenues were down 5% compared to the same period last year. As a result, segment operating losses were higher and Adjusted EBITDA was lower for the fourth quarter of fiscal year 2017, as compared to the same period last year. Highlights for the quarter include:

The launch of ViaSat-2 was somewhat further delayed due to civil unrest in French Guiana, the location of the ViaSat-2 launch site. ViaSat-2 is now scheduled to launch on June 1, 2017, with broadband services expected to be available in the fourth quarter of fiscal year 2018 following in-orbit testing.

Development of first flight hardware for the ViaSat-3 program remained on track and is expected to begin arriving in ViaSat’s Tempe, Arizona satellite integration facility in late calendar year 2017.

Following the close of fiscal 2017, ViaSat introduced its Gen-2 in-flight internet equipment for the ViaSat-2 and ViaSat-3 class satellite platforms. The Gen-2 equipment is expected to offer commercial and government aircraft even faster and higher-quality in-flight internet performance as compared to ViaSat’s prior generation system.

Fiscal 2017 Commercial Networks segment revenues were lower, operating loss was higher and Adjusted EBITDA was lower compared to the same period last year. Earnings decreases were primarily a result of the Company’s fiscal year 2017 ViaSat-3 R&D activities.

Government Systems In the fourth quarter of fiscal year 2017, ViaSat’s Government Systems segment revenues increased 20% to a record $196.5 million, and Adjusted EBITDA grew 3% to $45.0 million, compared to the prior year period, while the operating profit was slightly lower by $3.1 million. Included in the Company’s fourth quarter and fiscal 2017 results was a loss contingency reserve recorded by ViaSat’s 52% majority-owned subsidiary TrellisWare. This reserve impacted fiscal fourth quarter of 2017 consolidated and segment operating profit by a total amount of $11.8 million; with a net effect after noncontrolling interest impacts to net income attributable to ViaSat, Inc. common stockholders of $4.0 million or $0.07 per diluted share and Adjusted EBITDA of $8.1 million (See Table: ’An Itemized Reconciliation between Segment Operating Profit (Loss) Before Corporate, Amortization of Acquired Intangibles and Adjusted EBITDA’). Excluding the impacts of this reserve, year-over-year segment operating profits and Adjusted EBITDA for the fiscal fourth quarter of 2017 would have grown by 30% and 22%, respectively. Highlights for the quarter include:

Record year-to-date segment contract awards of $850.7 million, reflecting a 1.2 to 1 book-to-bill ratio, supported strong segment backlog of $633.3 million, a 30% increase over the same period last year.

Revenue growth in the quarter and year-to-date was driven by ViaSat’s cybersecurity and information assurance, tactical data link and tactical satellite communication radio products.

Global mobile broadband service revenues were boosted by increased satellite service subscriptions for senior U.S. government leader aircraft in both the quarter and year-to-date periods.

Following the close of fiscal year 2017, the KOR-24A Small Tactical Terminal (STT) airborne radio continued to expand its presence on a number of U.S. and Allied radio programs and platforms, including the Boeing AV-8B Harrier aircraft.

ViaSat’s Government Systems segment performance for fiscal year 2017 included a number of new record highs: revenue growth of 13% to $685.1 million, operating profit growth of 11% to $96.7 million and Adjusted EBITDA growth of 13% to $162.3 million compared to fiscal 2016.

Conference Call ViaSat will host a conference call to discuss the fourth quarter and fiscal year 2017 results. Details follow:

DATE/TIME: Tuesday, May 23, 2017 at 5:00 p.m. Eastern Time
DIAL-IN:
(877) 640-9809 in the U.S.; (914) 495-8528 international
WEBCAST:
investors.viasat.com.
REPLAY:
Available from 8:00 p.m. Eastern Time on Tuesday, May 23 until 11:59 p.m. Eastern Time on Wednesday, May 24 by dialing (855) 859-2056 for U.S. callers and (404) 537-3406 for international callers; conference ID 24663268.

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 2018 and beyond; satellite construction and launch activities; including the launch, in-orbit testing and entry into service of the ViaSat-2 satellite; the performance and benefits of our ViaSat-2 and ViaSat-3 class satellites; the expected completion, capacity, service, coverage, service speeds, availability and other features of our satellites, and the timing, cost, economics and other benefits associated therewith; the development and performance of equipment and hardware for the ViaSat-2 and ViaSat-3 class satellite platforms and the benefits associated therewith; international expansion plans; our strategic partnering arrangement with Eutelsat and the costs, economics and other benefits associated therewith; and the roll-out and uptake of products and services by, and services offered by, our airline partners as well as our commercial networks and government systems 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 realize the anticipated benefits of our strategic partnership arrangement with Eutelsat; 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 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.

About ViaSat ViaSat, Inc. (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: www.viasat.com, 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 ? 2017 ViaSat, Inc. All rights reserved. ViaSat, and the ViaSat logo, are registered trademark of ViaSat, Inc. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners.

Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three months ended
Twelve months ended
March 31, 2017
March 31, 2016
March 31, 2017
March 31, 2016
Revenues:
Product revenues
$
196,451
$
176,523
$
713,936
$
664,821
Service revenues
219,968
195,441
845,401
752,610
Total revenues
416,419
371,964
1,559,337
1,417,431
Operating expenses:
Cost of product revenues
141,942
133,414
524,026
489,246
Cost of service revenues
132,159
129,125
524,949
495,099
Selling, general and administrative
96,562
77,536
333,468
298,345
Independent research and development
39,857
21,615
129,647
77,184
Amortization of acquired intangible assets
3,223
2,780
10,788
16,438
Income from operations
2,676
7,494
36,459
41,119
Interest expense, net
(66)
(5,990)
(11,075)
(23,522)
Income before income taxes
2,610
1,504
25,384
17,597
(Benefit from) provision for income taxes
(1,639)
(2,883)
3,617
(4,173)
Net income
4,249
4,387
21,767
21,770
Less: net (loss) income attributable to noncontrolling interests, net of tax
(2,401)
(63)
(2,000)
29
Net income attributable to ViaSat Inc.
$
6,650
$
4,450
$
23,767
$
21,741
Diluted net income per share attributable to ViaSat Inc. common stockholders
$
0.11
$
0.09
$
0.45
$
0.44
Diluted common equivalent shares
58,425
49,782
53,396
49,445
AN ITEMIZED RECONCILIATION BETWEEN NET INCOME ATTRIBUTABLE TO VIASAT INC.
ON A GAAP BASIS AND NON-GAAP BASIS IS AS FOLLOWS:
Three months ended
Twelve months ended
March 31, 2017
March 31, 2016
March 31, 2017
March 31, 2016
GAAP net income attributable to ViaSat Inc.
$
6,650
$
4,450
$
23,767
$
21,741
Amortization of acquired intangible assets
3,223
2,780
10,788
16,438
Stock-based compensation expense
15,852
13,194
55,775
47,510
Acquisition related expenses
-
-
615
-
Income tax effect
(7,266)
(6,143)
(25,372)
(24,664)
Non-GAAP net income attributable to ViaSat Inc.
$
18,459
$
14,281
$
65,573
$
61,025
Non-GAAP diluted net income per share attributable to ViaSat Inc. common stockholders $
0.32
$
0.29
$
1.23
$
1.23
Diluted common equivalent shares
58,425
49,782
53,396
49,445
AN ITEMIZED RECONCILIATION BETWEEN NET INCOME ATTRIBUTABLE TO VIASAT INC.
AND ADJUSTED EBITDA IS AS FOLLOWS:
Three months ended
Twelve months ended
March 31, 2017
March 31, 2016
March 31, 2017
March 31, 2016
GAAP net income attributable to ViaSat Inc.
$
6,650
$
4,450
$
23,767
$
21,741
(Benefit from) provision for income taxes
(1,639)
(2,883)
3,617
(4,173)
Interest expense, net
66
5,990
11,075
23,522
Depreciation and amortization
62,524
59,914
245,922
242,076
Stock-based compensation expense
15,852
13,194
55,775
47,510
Acquisition related expenses
-
-
615
-
Adjusted EBITDA
$
83,453
$
80,665
$
340,771
$
330,676
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 March 31, 2017
Three months ended March 31, 2016
Satellite
Commercial
Government
Total
Satellite
Commercial
Government
Total
Services
Networks
Systems
Services
Networks
Systems
Segment operating profit (loss) before corporate and amortization of acquired intangible assets
$
32,822
$
(52,499)
$
25,576
$
5,899
$
21,981
$
(40,411)
$
28,704
$
10,274
Depreciation *
34,724
6,093
8,988
49,805
35,025
4,928
8,692
48,645
Stock-based compensation expense
3,569
6,172
6,111
15,852
3,193
5,252
4,749
13,194
Other amortization
3,898
3,719
1,879
9,496
3,451
3,650
1,388
8,489
Acquisition related expenses
-
-
-
-
-
-
-
-
Noncontrolling interests
-
-
2,401
2,401
-
-
63
**
63
Adjusted EBITDA
$
75,013
$
(36,515)
$
44,955
$
83,453
$
63,650
$
(26,581)
$
43,596 **
$
80,665
Twelve months ended March 31, 2017
Twelve months ended March 31, 2016
Satellite
Commercial
Government
Total
Satellite
Commercial
Government
Total
Services
Networks
Systems
Services
Networks
Systems
Segment operating profit (loss) before corporate and amortization of acquired intangible assets
$131,085
$
(180,496)
$
96,658
$
47,247
$
81,830
$
(111,339)
$
87,066
$
57,557
Depreciation *
141,108
24,483
35,095
200,686
137,541
21,693
33,852
193,086
Stock-based compensation expense
11,917
22,225
21,633
55,775
10,798
19,029
17,683
47,510
Other amortization
13,136
14,631
6,681
34,448
13,499
14,068
4,985
32,552
Acquisition related expenses
190
179
246
615
-
-
-
-
Noncontrolling interests
-
-
2,000
2,000
-
-
(29)
**
(29)
Adjusted EBITDA
$297,436
$
(118,978)
$
162,313
$340,771
$243,668
$
(56,549)
$
143,557
**
$330,676
* 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.
** Government systems segment Adjusted EBITDA has been adjusted to exclude noncontrolling interest, net of tax.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
As of
As of
As of
As of
Assets
March 31, 2017
March 31, 2016
Liabilities and Equity
March 31, 2017
March 31, 2016
Current assets:
Current liabilities:
Cash and cash equivalents
$
130,098
$
42,088
Accounts payable
$
100,270
$
95,645
Accounts receivable, net
263,721
286,724
Accrued liabilities
225,247
184,344
Inventories
163,201
145,161
Total current liabilities
325,517
279,989
Prepaid expenses and other current assets*** 57,836
47,583
Senior Notes, net***
575,380
575,304
Total current assets
614,856
521,556
Other long-term debt, net***
273,103
370,224
Other liabilities
42,722
37,371
Total liabilities
1,216,722
1,262,888
Property, equipment and satellites, net
1,648,878
1,385,107
Other acquired intangible assets, net
41,677
33,604
Total ViaSat Inc. stockholders’ equity
1,734,618
1,129,103
Goodwill
119,876
117,040
Noncontrolling interest in subsidiaries 3,313
5,321
Other assets***
529,366
340,005
Total equity
1,737,931
1,134,424
Total assets
$
2,954,653
$
2,397,312
Total liabilities and equity
$
2,954,653
$
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.

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