ViaSat, Inc.

Good morning. My name is Lawrence, and I will be your conference facilitator. Welcome to Viasat's conference call to discuss its announced combination with Inmarsat. As a reminder, this conference is being recorded. Now I would like to turn the call over to Mr. Robert Blair, General Counsel of Viasat. Sir, please go ahead.

Thank you, and thanks for joining us. We'll start with our safe harbor disclosure. This discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q. Copies are available from the SEC or from our website. And I'll turn it over to Rick.

Okay, thanks, Robert. Good morning, and thanks, everyone, for joining our conference call. I'm Rick Baldrige, the CEO of ISAP. Participating on our call today are Mark Dankberg, our executive chairman, Sean Duffy, the CFO of Viasat, Rajiv Shree, the CEO of MRSAT, and Tony Bates, the CFO of MRSAT, and myself. First of all, we're pleased and excited to announce that Viasat has entered into a combination agreement with MRSAT. We believe this transaction is a major moment, not just for the industry, but for global broadband services. Our team will go into detail in a moment, but first I'd like to cover our earnings announcement that was also released this morning. Today we released our 2Q FY 2022 financial results and shareholder letter. In summary, our financial performance in the second quarter was quite strong as we continued to execute well. We delivered revenue of $701 million, up 27% year-over-year. Adjusted EBITDA of $155 million, up 19% year-over-year. The results were driven by strong product sales, service revenue growth across all of our segments. Our prior acquisitions partially offset by higher costs and expenses, including new market entry, research and development, and sales and marketing. Total consolidated awards were $832 million, up 14% year over year, and we ended the quarter with a backlog of $2.3 billion, slightly higher compared to the prior period backlog. Backlog does not include $3.8 billion of indefinite delivery and indefinite quantity or IDIQ awards. These strong results reinforce our confidence and our ability to meet our standalone near-term guidance, and five-year financial targets, as discussed in our previous calls. In addition, the launch of Biosat 3 Americas, the first of our three Biosat 3 satellites, remains on track for the first half of calendar year 2022. So now let's turn to the transaction presentation that's available on our investor relations website. You guys should have access to that. Turning to slide three in that transaction overview, BISAT is paying approximately $7.34 billion in cash, stock, and assumed debt. The assumed debt for MRSAT ends at the end of September, which represents approximately nine times projected calendar 2021 adjusted EBITDA, including the annual run rate cost synergies. The transaction is expected to close in the second half of the calendar year of 2022, assuming all relevant regulatory approvals and occurrences. At the time of close and a fully diluted basis, Biosat shareholders are expected to own approximately 62.5% of the outstanding shares with MRSAT shareholders holding approximately 37.5%. No existing MRSAT shareholder will receive shares equal to or greater than 10% of the combined company. Committed funding for the transaction has been secured from Tier 1 Money Center banks. After closing, we expect to deleverage at an accelerated rate, given our mid-teens adjusted EBITDA growth and increased free cash flow, while peak leverage is expected to be approximately about a half a turn or so higher than it would be on a standalone basis. Assuming the second half of 2022 closes, the pro forma net leverage at December 31, 22 is expected to be approximately 5%, might be able to do a little bit better than that. We believe this will be our peak leverage, net leverage ratio. And leverage is expected to decline more than one term during the first 24 months and continue to decline rapidly thereafter. BICET has a heritage of international cooperation and mutual benefit of our customers. We're committed to grow our UK presence and support UK national space ambitions. We think together we're stronger. On slide four, on this slide, you'll get a view of the combined company. It will have more than $4 billion in revenue and approximately $1.4 billion in adjusted EBITDA. if it were to have been combined in calendar 2021. The takeaway is we have the scale to invest even more effectively in R&D and network infrastructure to further increase the pace of innovation that drives new and better services for our customers and opportunities for our employees, and it's good for investors. On slide five, our transaction rationale, Let's talk about why we're so excited about this deal. There are four key points. One, enhanced growth and innovation opportunities. The combined company brings together very complementary assets and capabilities, including narrowband, broadband, space, and ground assets. When integrated, these assets can better enable the service characteristics that the mobility customers need. We intend to increase the pace and scale of innovation in the mobile communications sector, targeting a multi-layered hybrid network architecture which combines the best characteristics of each frequency band, orbit, and can include terrestrial augmentation for the lowest latency at the lowest total cost. Then we'll have immediate global coverage to start with enhanced speed and coverage density as each bias at three that brought into service. Second thing is our ability to offer new and better services to our customers. Having global coverage and enhanced depth of coverage means better option for customers across more verticals, transforming our offerings from regional to virtually anywhere and everywhere in multiple mobility markets. We'll have redundancies in space, which drives resiliency and reliability. Customers will benefit much more from the buying company in a way that would be difficult for either of our companies on a standalone basis. We'll give you examples of this as we go through the presentation today, including in rapidly transforming and growing the IoT market. As to why we're doing it, we're doing it to create the best and most efficient communication solutions for our customers, and we're very excited about the many ways we can enhance and grow with greater innovations. And it makes sense financially. Our increased financial strength supports innovation, investors, customers, and our combined workforce. Together we have a foundation for rapid double-digit top and bottom line growth, driven by a very diverse set of fast-growing businesses, including mobility and government. A higher percentage of our revenue will be recurring, which we think is great. We'll have a fully funded path to positive free cash flow which lowers risk. When free cash flow turns positive, we'll generate a lot more, more than two times of the free cash flow, and we'll be accretive not only in EBITDA, but free cash flow, the transaction will be. There's a potential upside from a revitalization of L-band and IoT growth. We'll have greater presence in a broader range in the $1.6 trillion broadband and IoT market. The portfolio of offers greater resilience to geopolitical uncertainty and black swan events like COVID. You guys saw what we experienced this last year. Having the diversity really helped us offset some of the headwinds in other areas. Sean will cover the financial aspects in greater detail in a later presentation. We build on the heritage of cooperation that both companies have established. MRSAT is a heritage of international aviation and maritime safety that yield responsibility and opportunity. BISAT has a commitment to the space sustainability and peaceful cooperation among all nations. Together, we're committed to sustain and grow our UK presence and to support UK national space ambitions. We already have a critical presence in the UK. Our second satellite, the BISAT-3 fleet, will be controlled from facilities in the UK and And we plan to invest in technical talent, space-related development in the UK, which will provide growth and high-value employment. We'll continue to build on Biosat's unique relationships with leading regional broadband satellite partners in Australia, Brazil, Europe, and more key geographies as we come. We're a strong advocate for sustainable space policy and regulations and cooperation that can help ensure a place in space for all nations. that aspire to that goal and to aim to achieve the technology, economic, national security, sovereignty, and high paying jobs space can enable. We believe in Marset's heritage and strong international relations can help us achieve those goals. So now I'd like to introduce Rajeev to share his thoughts on the transaction. So over to you Rajeev. Yeah, thanks.