Viasat Announces Second Quarter Fiscal Year 2020 Results

CARLSBAD, Calif., Nov. 7, 2019 /PRNewswire/ -- Viasat Inc. (NASDAQ: VSAT), a global communications company, today announced financial results for the fiscal second quarter ended September 30, 2019.

"Sustained momentum in Satellite Services and Government Systems segments delivered record results and continued margin expansion," said Mark Dankberg, Viasat chairman and CEO. "Our latest in-flight connectivity (IFC) wins, including our first entry into South America with Azul and expansion to EL AL's full global fleet, are further proof points of our ability to leverage our leading North American reputation globally. We are focused on converting a healthy pipeline for global IFC opportunities, propelled by continued progress on the ViaSat-3 constellation, into sustained growth and market leadership. Record backlog, a solid quarterly book-to-bill of 117%, gains in fixed broadband subscriber average revenue per user (ARPU), mobile tail count, an expanding government segment addressable market, and leading competitive positions in attractive broadband vertical and geographic markets all create opportunities for continued growth."

COMPANY HIGHLIGHTS

• Named #12 on Fortune Magazine's 2019 Change the World list
• Named Global Satellite Business of the Year at the World Satellite Business Week 2019 conference
• Named a 2019 Top San Diego Employer Brands in Hired's third annual Brand Health Report
• Awarded one of the Best Places to Work for Disability Inclusion by the Disability Equality Index^®
• Won Intellectual Property lawsuit against Acacia Communications
• Opened two offices in Brazil: São Paulo and Brasilia

SATELLITE SERVICES
— Q2 Fiscal Year 2020 Financials

• Revenues reached a new high of $205.7 million, a 26% increase year-over-year and a 5% increase sequentially; which marked the seventh sequential quarter of revenue gains
• New contract awards increased 29% year-over-year to $212.6 million
• Segment operating income equaled $5.1 million, compared to a $24.8 million operating loss in the prior year period
• Adjusted EBITDA increased by 77% year-over-year to $70.7 million

— Business Highlights

• U.S. fixed broadband subscriber ARPU reached a record $86.94, an increase of 17% year-over-year; as a higher percentage of the 587,000 subscriber base selected the Company's premium broadband service plans
• Since launch, Community Wi-Fi service in Mexico has reached more than 1.8 million people; trial programs launched in the State of São Paulo, Brazil
• Viasat has now deployed over 10,000 sites in Brazil, and received a follow-on order for over 1,000 additional Governo Eletrônico - Serviço de Atendimento ao Cidadão (GESAC) sites
• In business internet, Viasat announced telecom channel partners have access to sell ViaSat-2 business internet services in Mexico, Puerto Rico and the U.S. Virgin Islands; demonstrated ViaSat-2 business internet service availability in Jamaica with partner ReadyNet; and deployed satellite internet services to schools, government institutions and health clinics participating in Mexico's 'Internet para Todos' program
• IFC service now active on 1,353 commercial aircraft – up 51% year-over-year; as of the end of second quarter fiscal year 2020 Viasat expects to install its IFC equipment on over 600 additional commercial aircraft under existing contracts
• Announced new content partner deals with destination outfits, InflightFlix and GetYourGuide, to drive new ancillary revenue streams for airline customers
• New IFC contracts during the quarter: SAS selected Viasat IFC for its new Airbus fleet additions of A321LR and A330-300E; and JetBlue selected Viasat IFC for its Airbus A220-300 aircraft (reported on last earning's call)
• New IFC contracts disclosed after the close of the second quarter of fiscal year 2020:
• Azul selected Viasat IFC to deliver in-flight Wi-Fi service on more than 100 combined Airbus A320neo and Embraer E195-E2 aircraft; and
• EL AL Israel Airlines committed to go full fleet with Viasat, adding the latest Viasat equipment to its new Boeing 777 widebody and remaining Boeing 737 narrowbody aircraft

— Fiscal Year-to-Date Summary

• Fiscal year-to-date, Satellite Services segment reached record revenue levels; operating profit and Adjusted EBITDA performance for the segment were higher compared to the same period last year reflecting the same year-over-year impacts seen in the second quarter of fiscal year 2020.

COMMERCIAL NETWORKS
— Q2 Fiscal Year 2020 Financials

• Revenues were $88.0 million, a 23% decrease year-over-year due to the accelerated American Airlines install schedule in the prior-year period; sequentially, segment revenues were up 11% on record revenues in the Company's antenna systems product lines
• New contract awards were at $62.1 million, a 50% year-over-year decrease
• Segment operating loss was 19% higher and Adjusted EBITDA was lower compared to the same period last year due to expected reductions in IFC terminal deliveries, higher research and development costs and increased selling, general and administrative expenses

— Business Highlights

• Progress continued on the ViaSat-3 spacecraft program: completed initial acceptance of the ViaSat-3 payload module for Europe, Middle East and Africa (EMEA); both ViaSat-3 (Americas) and ViaSat-3 (EMEA) payload modules are in the Viasat high bay in Tempe, AZ
• Progress continued on the ViaSat-3 ground infrastructure program with major European fiber providers having been selected
• Viasat's new fully redundant Satellite Control Center took control of the WildBlue-1 satellite in September 2019; remaining satellites expected to begin to transition in calendar year 2020

— Fiscal Year-to-Date Summary

• Fiscal year-to-date, Commercial Networks segment revenue was lower, operating loss was higher and Adjusted EBITDA was lower compared to the same period last year, reflecting year-over-year impacts similar to those seen in the second quarter of fiscal year 2020.

GOVERNMENT SYSTEMS
— Q2 Fiscal Year 2020 Financials

• Revenues were a new high of $298.5 million, an increase of 24% year-over-year led by expanding positions in the Company's data links, satcom and mobile networking product lines
• New contract awards were at $417.6 million, generating a 1:4 to 1 book-to-bill ratio, and record segment backlog of $991.6 million. Backlog excludes the unexercised ceiling on Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts
• Operating profit increased 38% year-over-year to a new high of $62.1 million
• Adjusted EBITDA increased 27% to a record $79.3 million

— Business Highlights

• Awarded an ID/IQ contract by the Naval Information Warfare Systems Command for the purchase of supplemental units for Viasat's KOR-24A Small Tactical Terminal
• Announced expansive line of network encryption products available for use by all Five Eyes partner nations: U.S., UK, Canada, Australia and New Zealand
• Upgraded the North Atlantic Treaty Organization's Ultra-High Frequency satellite communications control station to comply with new Integrated Waveform on time and under budget
• Demonstrated a Viasat Hybrid Adaptive Network concept at AFWERX Vegas, a U.S. Air Force event focused on multi-network, multi-orbit satellite communications system

—Fiscal Year-to-Date Summary

• Fiscal year-to-date, Government Systems segment revenue was higher, and operating profit and Adjusted EBITDA performance for the segment were higher compared to the same period last year reflecting strong performance across the segment's product lines, especially government satellite communication systems, tactical data links, tactical satellite communications radio products and global mobility/intelligence surveillance and reconnaissance offerings.

Conference Call
Viasat will host a conference call to discuss the second quarter fiscal year 2020 results. Details follow:

About Viasat
Viasat is a global communications company that believes everyone and everything in the world can be connected. For more than 30 years, Viasat has helped shape how consumers, businesses, governments and militaries around the world communicate. Today, the Company is developing the ultimate global communications network to power high-quality, secure, affordable, fast connections to impact people's lives anywhere they are—on the ground, in the air or at sea. To learn more about Viasat, visit: www.viasat.com, go to Viasat's Corporate Blog, or follow the Company on social media at: Facebook, Instagram, LinkedIn, Twitter or YouTube.

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 the remainder of fiscal year 2020 and beyond; satellite construction and launch activities; the expected completion, performance, capacity, service, coverage, service speeds, availability and other features of our satellites, and the timing, cost, economics and other benefits associated therewith; international expansion plans, including in Brazil, Jamaica and Mexico; the transition of Viasat's satellites to the Satellite Control Center; the number of IFC systems expected to be installed under existing contracts with commercial airlines; and the impacts of new contracts entered into with, and the roll-out, ramp-up and uptake of products and services by, and services to be offered by, our airline partners and other customers. Readers are cautioned that actual results could differ materially and adversely 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 acquisitions or strategic partnering arrangements; our ability to successfully develop, introduce and sell new technologies, products and services; the number of purchase orders that are submitted and accepted for the installation of IFC systems with respect to aircraft under contract; 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 (including changes affecting spectrum availability or permitted uses) on our ability to sell products and services; orbital arc congestion affecting availability of Ka-band spectrum; the effect of changes in the way Ka-band spectrum is used by others; 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.

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 © 2019 Viasat, Inc. All rights reserved. Viasat, the Viasat logo and the Viasat signal are registered trademarks of Viasat, Inc. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners.

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SOURCE Viasat, Inc.