Via Satellite’s financial quarterly wrap-up condenses all of our quarterly reporting of publicly traded companies into one convenient location, with additional insight and analysis for our premium subscribers.  

First Quarter 2021 Overview

From the calm breezes and clear skies of a hurricane’s eye, satellite industry executives got a much clearer look into life on the other side of COVID-19’s storm wall — and they like what they see. Cooped up travelers are getting vaccinated and returning to the skies on commercial flights, and to the sea on luxury cruise lines. They’re sharing their experiences over social media, watching their favorite streamers, and continuing to work remotely. The return of the mobility markets — especially In-Flight Connectivity (IFC) — will provide a much-needed jolt to the entire satellite service value chain.

The bright spots for the satellite industry in Q1 2021 remain relatively unchanged from Q4 2020. The government and military are still buying satellites and both NASA and the U.S. Space Force have asked Congress for more money to spend in space. Some operators continue to gain subscribers and are starting to reward shareholders with buyback programs. Enterprise Internet of Things (IoT) and satellite data services continue to thrive. Satellite operators have also significantly cut down their operating expenses, which has helped them (mostly) maintain financial guidance in 2021. The companies that are most exposed to risk are (smartly) diversifying their investments. As the saying goes, “If you can’t beat ’em, buy ’em!”

The pain points also remain the same. Several big Geostationary High-Throughput Satellites (GEO HTS) remain delayed and are being pushed back further and further into the year, and even into 2022. These delays couldn’t have come at a worse time for operators hoping to service the post-COVID rebound with next-gen services, and watching SpaceX and OneWeb continue to build out their Low-Earth Orbit (LEO) constellations without slowing down, and Telesat is not far behind. This, combined with supply chain issues from COVID-19 shut downs, creates an environment where there is absolutely no room for failure in production, in delivery, and in space. The severity of consequences due to preventable setbacks were illustrated quite clearly during this quarter’s results.

-By Jeffrey Hill

Operators (in alphabetical order): 

EchoStar / Hughes — Hughes Revenue up 3.8% in Q1, Despite 25K Subscriber Loss in the US

• The second quarter in a row of broadband subscriber loss for Hughes. Total broadband subscribers were 1,553,000 as of March 31, 2021 — down 11,000 from the previous quarter.
• Hughes lost 25,000 U.S. subscribers during the quarter, prompting analysts to ask whether SpaceX Starlink’s beta trials were finally making an impact on Hughes’ service. President Pradman Kaul said: “We’ve had no impact to date obviously from [Starlink] because all they’ve been doing is running a beta program. They haven’t actually started implementing an operational program.”
• JUPITER 3 satellite launch pushed back to the second half of 2022.
• EchoStar’s consolidated revenues of $483 million are an increase of 3.6% over the same time period in 2020, driven by higher sales of broadband services.
• EchoStar’s Net income increased $135.3 million to $77.6 million thanks to higher operating income and higher gains on investments.

Eutelsat (Q3) — Eutelsat Pushes QUANTUM Satellite Launch Back to Third Quarter 2021 

• EUTELSAT QUANTUM satellite launch pushed back a second time to the third quarter of the 2021 calendar year. It was previously scheduled for Q2 of 2021. HOTBIRD 13G is currently on course for H1 of 2022; KONNECT VHTS in H1 2022.
• The operator made a $550 million investment into LEO constellation operator OneWeb right after the conclusion of the quarter. Via Satellite‘s Mark Holmes spoke with Eutelsat Deputy CEO Michel Azibert about why the company made the investment. We’ll see the impact of that investment later this year.
• Revenue for the quarter was down 6.1% on a year-over-year basis, with the biggest drop coming from Eutelsat’s largest segment, broadcast, at 6.8% YoY.
• Eutelsat anticipates “broad slowdown” in the pace of new broadcast business against the current operating backdrop, resulting in lower revenues in Europe.
• Fixed Broadband was the only segment that saw an increase. Q3 Fixed Broadband revenues stood at 20.5 million euros ($24.9 million), up 1.9% year-over-year.
• Eutelsat’s backlog increased 6% to 4.5 billion euros ($5.5 billion), thanks to its contract renewal with the U.S. government.

Intelsat — Intelsat’s Gogo Commercial Aviation Acquisition Pays Off in Q1 Results

• The U.S. operator turned in its first year-over-year double-digit revenue increase in at least eight years, thanks to contributions from its recently acquired Gogo Commercial Aviation business. First fiscal quarter 2021 revenues were $502.8 million — an increase of $43.9 million (0r 10%) from Q1 2020.
• These gains were partially offset by mobility and enterprise contract terminations that happened during the quarter.
• Government and Network Services were up, but Intelsat’s Media division revenues declined 10% YoY to $185 million. Contracted backlog dipped very slightly from $6.1 billion to $5.9 billion.
• Cut its total quarterly net losses from $218.8 million in Q1 2020 to $174.9 million in Q1 2021.
• Intelsat successfully completed the docking of Northrop Grumman‘s Mission Extension Vehicle-2 (MEV-2) to the Intelsat 10-02 satellite and extended its life by 5 years.
• Remains in the process of a Chapter 11 bankruptcy reorganization.

Iridium — Iridium Adds Subscribers, Maintains 2021 Financial Guidance After Steady Q1

• Iridium continued its streak of billable subscriber growth in its first fiscal quarter of 2021, ending the period with 1,518,000 total (a 14% YoY jump) thanks to a spike in new commercial and government IoT customers.
• Reduced its quarterly net loss from $31.7 million in the first quarter of 2020 to $5.2 million in the first quarter of 2021, due to the absence of debt extinguishment costs.
• Brought in a total revenue of $146.5 million during the quarter, a 1% increase over the same period last year. Iridium maintains its 2021 financial outlook
• The company retired another 1.6 million shares of common stock during the quarter under its recently authorized share repurchase program, initiated in the previous quarter.

SES — SES Yields Net Profits in Q1, Launches Share Buyback Program

• SES Networks’ business reached 759 million euros ($922.4 million) in FY 2020 revenues, marking 5% YoY growth and 27% growth since 2017.
• The operator turned in a 42% year-over-year increase in adjusted net profits to 75 million euros ($90.3 million) and a 7% reduction in recurring operating expenses from the same period in 2020.
• Signed $180 million of additional backlog in the quarter for SES-17 and O3b mPOWER ahead of launch in the second half of 2021. SES CEO Steve Collar specifically mentioned his excitement about opportunities here, “as the world emerges from the COVID environment and demand for connectivity increases exponentially.”
• Launched a 100 million euro ($120.5 million) share buyback program.

Telesat — Telesat Q1 Revenues Decline Due to Mobility Headwinds 

• The COVID-19 pandemic strikes at the Canadian operator’s air and maritime mobility revenues –  Telesat reported $190 million Canadian dollars ($157 million) in Q1 revenue, down 9% compared to the same quarter in 2020.
• Net income up 115% over the same time last year at CA$42 million ($34.7 million) compared to a net loss of CA$278 million ($229 million) in Q1 2020.
• Telesat’s backlog for future services stands at approximately CA$2.5 billion ($2 billion).
• Broadcast currently makes up 52% of Telesat’s revenue, Enterprise Service 46%, and Consulting 2%.
• Quilty Analytics conducted an assessment of Telesat’s Lightspeed constellation vs. SpaceX Starlink. Quilty writes: “Our financial model of the Lightspeed program confirms that Telesat will likely need to generate ‘run rate revenue’ of $2.5 billion to realize a return on its investment in line with a hurdle rate of 10-12%. To achieve this target, Telesat must grow its annual data revenues, currently at $300 million, by ~8x.”

Viasat (FY21) — Viasat Earnings Stable in FY2021 as Operator Prepares for 2022 ViaSat-3 Launch

• Revenue flat at $2.3 billion for its 2021 fiscal year. Operating income was $58.2 million, up from $38.4 million in fiscal year 2020. Net income was $3.7 million, up from $200,000 in fiscal year 2020.
• No additional delays expected for ViaSat-3. The operator remains on track to launch the first ViaSat-3 satellite in early calendar year 2022.
• Consolidated awards hit a new record of $2.7 billion for the fiscal year, bringing Viasat’s backlog to $2.3 billion, 23% higher over the prior fiscal year.
• For FY2022, Viasat sees a strong outlook for Satellite Services, especially in IFC, with the return-to-flight of the Boeing 737-MAX and new customers including Delta and KLM.

Manufacturers:

Airbus Defence and Space — New Satellite Orders Drive Airbus Defence and Space’s Q1 Performance

• Net order intake jumped 13% year-over-year in its 2021 fiscal first quarter to 1.926 billion euros ($2.32 billion), driven by contract wins in space systems and recurring services orders in military aircraft.
• Two big orders – won a contract from Sky Perfect JSAT to build its Superbird-9 satellite and also signed a deal with Eutelsat to build a new, all-electric satellite.
• Defence and Space revenues remained flat YoY at $2.55 billion.
• The company maintains its 2021 financial guidance and assumes, “no further disruptions to the world economy, air traffic, the company’s internal operations, and its ability to deliver products and services.”

Boeing Defense, Space & Security —Boeing Defense, Space & Security Sees Sharp Increase in Q1 Revenue

• Defense, Space & Security division reports $7.2 billion in revenue in its Q1 2021 financial results, reflecting a 19% YoY jump. However, most of these gains were due to increased orders for military aircraft.
• The division’s backlog now stands at $61 billion, of which 31% represents orders from customers outside the United States.
• Began production of the T-7A Red Hawk Advanced Trainer and successfully conducted the Green Run hot fire test for NASA’s Space Launch System.”
• The division stands to benefit if the U.S. Space Force and NASA get their requested budget increases.
• Overall company losses are starting to flatten. Boeing reported $15.2 billion in company-wide Q1 2021 revenues — a drop from its Q1 2020 total of $16.9 billion, but nearly as bad as declines in 2020. The company hopes the big turnaround moment is the return of the 737-MAX aircraft.

L3Harris — L3Harris Reports Modest Gains in Q1 Tactical Satcom, Space Sales

• L3Harris continues to benefit from the U.S. Department of Defense‘s program to modernize its tactical communications, which lead to an 2.9% YoY increase in military business and $1.1 billion in organic revenue in Q1.
• Received several high-value orders in Q1, including: $72 million from U.S. Special Operations Command’s $255 million Next Generation Tactical Communications (NGTC) multi-channel manpack contract; $28 million in Q1 orders from the U.S. Navy for satcom terminals; and $24 million in orders to deliver its Hawkeye III Very Small Aperture (VSAT) terminals to the U.S. Army.
• Space-specific organic revenues were $1.2 billion. The Space division won a $40 million award from NOAA to develop a space weather command and control system for the GOES-R system.

Lockheed Martin / ULA — Lockheed Martin Reports Slight Space Sales Bump in Q1

• Lockheed’s Space segment growth streak continues further. The division saw another quarter of increased sales — $3 billion in net Space sales in the first quarter (Q1) of 2021 — a 3% YoY increase.
• The division raked in $20 million in additional sales for commercial civil space programs with higher volume primarily in space transportation programs.
• Operating profit decreased $54 million or 19% in Q1, attributed primarily to lower risk retirements in the Advanced Extremely High Frequency (AEHF) program.
• Equity earnings  from United Launch Alliance (ULA) continue to drop. Total equity losses primarily from ULA in Space’s operating profit were approximately $5 million loss,  a 2% decrease to Space’s operating profit in the first quarter of 2021. This compares to earnings of $30 million, or 11%, in the first quarter of 2020.

Maxar Technologies — Maxar Takes Hit from SiriusXM Satellite Loss, Pushes Legion Launch to Q4

• Maxar’s results were brought down by a $28 million charge due to the failure of the SXM-7 satellite for Sirius XM Holdings, which was launched in December 2020. Ouch!
• The company is pushing back the launch of the WorldView Legion satellite program to Q4 2021. In the previous quarter, the satellite was on target for a September 2021 launch.
• CEO Dan Jablonsky also said there is an industry-wide issue with some aspects of Honeywell electronic components that are being used on the first Legion satellite. Raytheon also reportedly found similar issues.
• Regardless, Jablonsky still expects the WorldView Legion program to reach target revenue a year and a half from now.
• Maxar posted a net loss of $84 million in Q1 2021 compared to a net loss of $48 million in Q1 2020. The company reported $392 million in revenue in Q1, up 3% from the year prior.

Northrop Grumman Space Systems — Northrop Grumman Space Sales Jump 29% in Q1 

• Another strong quarter for Northrop’s Space Systems division. Sales increased 29% in the first quarter of 2021 to $2.5 billion, up from $1.9 billion in the same quarter last year.
• Space sales were driven by higher volume on restricted programs, NASA Artemis programs, and the Next Generation Overhead Persistent Infrared Radar (Next Gen OPIR) program.
• Operating income for the Space segment also increased $74 million, or 37%, due to higher sales volume and a higher operating margin rate.
• Northrop Grumman raised its 2021 guidance and is now forecasting FY sales between $35.3 billion to $35.7 billion — up from earlier guidance between $35.1 billion to $35.5 billion.

Compare these results with our previous premium membership wrap-ups:
Fourth Quarter 2020 Wrap-Up
Third Quarter 2020 Wrap-Up

Other Items of Interest:

A must-read from the June edition as several new space companies set to begin reporting results: The Promises and Pitfalls of SPACs for the Space Economy

From the story: $83 billion was collected through 248 SPACs in 2020, according to SPAC Research. 2021’s figures have already surpassed that, and $102 billion has been collected through 318 SPACs.

Four new interviews with space SPAC leaders:
Spire: CEO Peter Platzer Says SPAC Puts Spire on a Clear Path to $1 Billion Target
Redwire: Filling the Middle Market in Space: Redwire CEO Talks Strategy and SPAC
BlackSky CEO on SPAC: ‘We’ve Been Preparing for This Moment for 7 Years’
Rocket Lab’s Peter Beck Explains SPAC Strategy, Growth Targets, and Plans for Neutron
Speaking of Rocket Lab and BlackSky: Rocket Lab’s recent launch failure impacts two SPACs at once

Analysts Applaud Eutelsat’s Ambition With OneWeb Investment From the story, a “hot take” from Jefferies’ Giles Thorne: “While nothing in this investment denies capital currently allocated for HTS-GEO, dividends, and de-leverage, Eutelsat has nonetheless denied investors a fortress balance sheet and/or enhanced returns by steering all the $507 million of C-band proceeds towards a moonshot. Some might quibble with that characterization, but none can conjure any heritage of Ku-band spectrum being viably monetized from Low-Earth Orbit. SoftBank‘s withdrawal of funding form OneWeb less than a year is a firm reminder of that.”