BUSINESS WIRE: SES: Solid YTD 2022 Results

MITTEILUNG UEBERMITTELT VON BUSINESS WIRE. FUER DEN INHALT IST ALLEIN DAS BERICHTENDE UNTERNEHMEN VERANTWORTLICH.

LUXEMBOURG --(BUSINESS WIRE)-- 03.11.2022 --

SES S.A. announces financial results for the nine and three months ended 30 September 2022.

YTD financial performance reflects solid execution across the business, complemented by value-accretive DRS GES acquisition

• Revenue of €1,400 million (+6.1% YOY as reported), Adjusted EBITDA⁽¹⁾ of €829 million (+0.7% YOY as reported), and Adjusted Net Profit €277 million (+23.2% YOY as reported) including contribution from DRS GES (acquired 1 August 2022) and stronger US dollar
• Growth in Networks (+2.7% YOY⁽²⁾) and important renewals secured in Video (-5.6% YOY including periodic⁽²⁾) underpins Full Year standalone outlook⁽³⁾ of €1,750-1,810 million in revenue and €1,030-1,070 million in Adjusted EBITDA
• Expected revenue contribution from DRS GES acquisition of $85-90 million (from 1 August 2022 to 31 December 2022)
• Leverage⁽⁴⁾ at 4x due to DRS GES acquisition and growth investment; expected to reduce to around 3.5x by end-2022

US C-band clearing de-risked to deliver over $3 billion of value; differentiated investments to drive future long-term growth

• SES-20, SES-21, and SES-22 all successfully in orbit. Clear line of sight to Phase 2 clearing proceeds ($3 billion pre-tax)
• Additional clearing for Verizon nearing completion; expect $155 million in Q4 2022 with balance up to $15 million in early 2023
• SES-17 (in service/consuming backlog) & O3b mPOWER (service introduction Q3 2023) gross backlog $955 million⁽⁵⁾ (up 22% YOY)
• First O3b mPOWER launch scheduled for 15 December 2022 with further launches planned for Q1 2023
• Ground-breaking EAGLE-1 partnership advances SES’ leadership in Quantum Key Distribution and secure connectivity across Europe

Steve Collar, CEO of SES, commented: “Our year-to-date performance reflects solid ongoing execution across the business and we remain fully on track to deliver on our 2022 outlook, to capture significant value from US C-band, and to position SES for profitable long-term growth through the deployment of our state-of-the-art multi-orbit assets and architecture.

Our Networks business is up 2.7% year-on-year primarily driven by ongoing success in Cruise and Aviation. SES-17 is now contributing to growth across the Americas with 13 new deals signed in 8 different geographies, while Thales InFlyt Experience continues to transition aircraft successfully. In Government, we have completed the acquisition of DRS GES more quickly than expected and integration with our existing US Government business is well underway. The combined SES Government Solutions business now boasts scale and an expanded value proposition to our Government end-users just as we launch significant new assets in SES-17 and O3b mPOWER.

The first O3b mPOWER launch is scheduled for 15 December and, together with two further launches scheduled in Q1 2023, the constellation will enter service in Q3 2023. Importantly we have already deployed the O3b mPOWER environment on the ground, and our customers are starting to receive O3b mPOWER technology that will be deployed initially on our existing MEO constellation.

With the successful launches of our first three C-Band satellites, the second phase of clearing is de-risked and therefore we have clear line of sight to $3 billion in accelerated clearing payments due at the end of 2023. In equally good news, the additional US C-band clearing for Verizon is nearly complete and we expect to receive the majority of the $170 million of agreed proceeds by the end of this year.”

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.

• Video revenue of €763 million represents a reduction of 5.6% year-on-year including the planned impact of lower US wholesale revenue and periodic revenue of €10 million in Q1 2022. Excluding these two items, Video was 3.3% lower than YTD 2021 as lower volumes in mature markets were partially offset by growth in HD+ and Sports & Events.
• At 30 September 2022, SES delivers around 8,000 total TV channels to 366 million TV homes around the world, including around 3,100 High Definition TV channels. 73% of total TV channels are broadcast in MPEG-4 with an additional 6% broadcast in HEVC.
• Networks revenue of €636 million included the first contribution from DRS GES (acquired 1 August 2022) of €32 million. On a ‘same scope’ basis (excluding DRS GES) Networks grew by 2.7% year-on-year compared with YTD 2021 with growth in Mobility (of +17.7%) and Fixed Data (of +2.2%), while the rapid US withdrawal from Afghanistan in Q3 2021 was the main contributor to lower revenue in Government (-7.0%).
• Adjusted EBITDA of €829 million represented an Adjusted EBITDA margin of 59.2% (YTD 2021: 62.4%) including recurring operating expenses of €571 million and an EBITDA contribution of €4 million from the acquisition of DRS GES (from 1 August 2022). Adjusted EBITDA excludes US C-band operating expenses (net of reimbursement income) of €18 million (YTD 2021: €18 million) and other significant special items of €11 million (YTD 2021: €7 million).
• Adjusted Net Profit (as reported) improved by 23% year-on-year to €277 million including a net foreign exchange gain of €87 million (YTD 2021: €24 million gain) and higher income tax expense of €52 million (YTD 2021: €36 million expense).
• At 30 September 2022, the Adjusted Net Debt to Adjusted EBITDA ratio (including 50% of the €1,175 million of hybrid bonds as debt) was 4.0 times (YTD 2021: 3.4 times) reflecting the acquisition of DRS GES for $450 million, capital expenditure for SES-17 and O3b mPOWER, and costs related to US C-band clearing ahead of anticipated future reimbursements, and before receipt of proceeds from additional clearing for Verizon of $170 million (of which up to $155 million is expected in Q4 2022), and Phase II accelerated relocation payment of $2,991 million linked to 5 December 2023 clearing milestone.
• Contract backlog at 30 September 2022 was €5.1 billion (€6.4 billion gross backlog including backlog with contractual break clauses), including DRS GES contract backlog of €0.1 billion (€0.8 billion gross backlog).
• 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. This excludes the acquisition of DRS GES which is expected to contribute an additional $85-90 million to group revenue for the period 1 August 2022 to 31 December 2022.
• Capital expenditure (net cash absorbed by investing activities excluding acquisitions, financial investments, and US C-band repurposing) outlook (assuming an FX rate of €1=$1.13) is also unchanged and expected to be €950 million in 2022 with an average of €460 million for 2023-2026.

Operational performance

REVENUE BY BUSINESS UNIT

Future satellite launches

CONSOLIDATED INCOME STATEMENT

SUPPLEMENTARY INFORMATION

QUARTERLY INCOME STATEMENT (AS REPORTED)

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)

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.

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Presentation of Results:

A presentation of the results for investors and analysts will be hosted at 9.30 CET on 3 November 2022 and will be broadcast via webcast and conference call. The details for the conference call and webcast are as follows:

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 around 8,000 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 At constant FX and scope which refers to comparative figures restated, to neutralise currency variations, and excluding the acquisition of DRS Global Enterprise Solutions (DRS GES)
³ Financial outlook assumes a €/$ FX rate of €1 = $1.13, nominal satellite health, and nominal launch schedule. ‘Standalone’ outlook excludes acquisition of DRS GES
⁴ Ratio of Adjusted Net Debt (including 50% of the €1.175 billion of hybrid bonds as debt) to Adjusted EBITDA
⁵ Gross backlog $955 million (fully protected: $710 million)

View source version on businesswire.com: https://www.businesswire.com/news/home/20221102006065/en/

Richard Whiteing
Investor Relations
+352 710 725 261
richard.whiteing@ses.com

Suzanne Ong
External Communications
+352 710 725 500
suzanne.ong@ses.com