ViaSat, Inc.
May 23, 2017

ViaSat Announces Fourth Quarter and Fiscal Year 2017 Results

- Fiscal year 2017 set multiple new records including awards of $1.7 billion and revenues of $1.6 billion
- Operating cash flow generation hit highest level in Company history at $411.3 million for fiscal 2017, supporting next-generation satellite platform investments and satellite construction
- Fiscal year 2017 revenue up 10%, with new record revenues achieved in Satellite Services and Government Systems segments
- ViaSat-2 satellite scheduled to launch on June 1, 2017 from the Guiana Space Centre in French Guiana

CARLSBAD, Calif., May 23, 2017 /PRNewswire/ -- ViaSat Inc. (NASDAQ: 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-
Year
Change

FY17

FY16

Year-
Over-Year
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-
Year
Change

FY17

FY16

Year-
Over-Year
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™.
    • 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. (NASDAQ: 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 FacebookTwitterLinkedIn 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
Services


Commercial
Networks


Government
Systems


Total


Satellite
Services


Commercial
Networks


Government
Systems


Total

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
Services


Commercial
Networks


Government
Systems


Total


Satellite
Services


Commercial
Networks


Government
Systems


Total

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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