Eutelsat Communications

Welcome to the utilsat full year 2025-2026 results presentation. For the first part of the conference, the participants will be in listen-only mode. During the questions and answers session, participants will be able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speaker, Jean-François Fallacher, Chief Executive Officer, and Sébastien Rouge, Chief Financial Officer. Please go ahead.

Hello, welcome and thank you for joining us today in the middle of the summer for Utelsat's full year 25-26 results presentation. I am Jean-François Fallacher, the CEO of Utelsat and I am joined today by Sébastien Rouge, our Chief Financial Officer and Joanna Darlington, Head of Investors Relations. So let's go directly to the meat of this meeting and the highlights of our year. So I want to stress that our LIO revenues were ahead of expectations, up nearly 70% year-on-year to almost 300 million euros. And our LIO revenues are now representing 25% of group total revenues. Overall, our full year 25-26 results are in line with objectives. CAPEX are at just under 600 million euros, below the 900 million euro expectations, and Sébastien will come back to that. In March this year, we've added the final touch to our successful 5 billion euros. complete refinancing package with a 1.5 billion bond offering securing our mid-term capex needs and we also secure the major 350 million call of contract under nexus framework agreement with the french procurement arm of the french mod We also welcomed two weeks ago the US FCC C-BAN clearing order which is expected to deliver 504 million dollars in incentives payment in 2031. And finally, the imminent outcome of the IREA Square first rendezvous is expected to confirm Utelsat leadership on the LEO segment. Let's now turn to the financial highlights. Total revenues for full year 25-26 stood as you can read there at 1,235,000,000 down 0,6% on a reported basis and up 3% like for like. Revenues for four operating verticals stood at 1,197,000,000 up by 1.8% on a like-for-like basis. LEO revenues amounted to 297 million euros, up to almost 70%. and now accounting, as I was saying, for a quarter of our revenues. And this is up again by 70% versus last year. Adjusted EBITDA stood at 632 million on 30 of June, down 3.1 points Like for like, adjusted EBITDA margin stood at 51.2, 3.2 points like for like. As mentioned, these results were in line with our expectations. CapEx is at just under €600 million, below the €900 million expectation. This is leaving us with a net debt to EBITDA ratio of 2.32%. Let's go now to our operational performance. I will comment our revenues by vertical. Video, as you can see now, is representing 43% of our total revenues at 519 million euros. This is actually a decline in these legacy revenues by 13.1%. Then if we go to our fixed connectivity revenues, they are now representing 23% of the total group revenues and they rose by 15.6% to 270 million euros. Government services which are now representing 20% of our revenues at 235.5 million euros rose by 17.7% and our mobile connectivity which are representing 14% of the group total revenues with 172 million euros increased by 16%. If we now look at the next page, our total revenues stood at 1 billion 226 revenues. Again, on a like-for-like basis, it is an increase of plus 3%. and they reflected a 51 million negative currency effect and 21 million positive swing in other revenues mainly from revenue recognition from ARRI Square linked to the hotelsat involvement as a consortium system development prime and as well as some edging revenues. And revenues of our four operating verticals were up 1.8% on a like for like basis. Let's now zoom on our video business. As I was saying, video revenues were down by 13.1% this year. This is with no surprise reflecting the underlying market trend compounded as well by sanctions on our Russian channels that were imposed at the beginning of the year and by the termination of capacity contracts on two Russian satellites called X-81 and X-82. So fourth quarter revenues on the video side stood at 124.7 million, down by 14.4% on year-by-year basis, and 2.7% quarter-on-quarter, reflecting actually the first full quarter effects of these contract terminations. I was talking about the 81 and 82 contract terminations. Let's now turn more in detail into our connectivity business. Our total connectivity revenues stood at 677.9 million euros, up by 9.7% on a reported basis and 16.4% like for like. This is clearly thanks to the robust performance of Lio across all three verticals. As I was saying, Leo Growth exceeded expectations, up by almost 70% to 297 million euro revenues. And now, Leo is representing more than 40% of our connectivity business revenues and a quarter of the Group's total top line. The fourth quarter revenues stood at 214.9 million euros, up 24.7 like for like, and 30% quarter on quarter, again powered by the sustained growth in our LEO business. And in particular, they reflected the catch-up revenue recognition with respect to our Nexus framework contract with the French MoD. Now, if we zoom in each verticals on fixed connectivity, I am page 10 on the presentation. Fixed connectivity revenues stood at 270 million by 15.6%. Again here, thanks to the growth of LEO enabled solution and that was partially offset by more challenging conditions for geo-enabled solutions. The fourth quarter revenue of this specific segment were at 77.7 million, up 17% year-on-year, and 27.8% quarter-on-quarter, reflecting again our EU performance as well as catch-up revenue in the fourth quarter. Key wins in this fourth quarter included a new partner agreement with Voimatel, and the delivery of Leo Connectivity Services in Finland, supporting critical network infrastructure, resilient communication for enterprise and public sector customers, and connectivity in high northern latitudes, including Arctic regions, where our constellation is particularly strong. Let's go now to the government services segment where revenues stood up at 17.7%. This is strong growth and this is reflecting the revenue recognition related to the Centaur call of contract, part of again the nexus and the French MoD, as well as increased demand from other non-US governments and services that we are delivering in Ukraine on the LEO constellation. And fourth quarter of this segment was up by 36.9% year-on-year and by 70% quarter-on-quarter. This was linked to the above-mentioned contract with the French procurement arm of the French MoD. On mobile now connectivity. Revenues up 16% year-on-year, precisely 15.9%. This reflected the ongoing strong performance of the aero segment, both on LEO and GEO solutions. This is really a segment where we are benefiting from our multi-orbit capabilities at UTSAT, as well as more limited contribution from maritime, where LEO growth was unfortunately partially offset by softer trends in the GEO services for maritime. Fourth quarter revenues stood at 50 million euros, up 18.6% year-on-year and 11.8% quarter-on-quarter. Let me comment a few commercial successes. In Q4, where we signed a multi-year, multi-million dollar agreement with AST Network to expand the use of Utelsat OneWeb Lio services as part of hybrid connectivity solutions for maritime customers worldwide. Utelsat also signed a new partner agreement with Greece, Tototeo, to deliver the Lio connectivity services to customers across the global maritime sector. and this is clearly strengthening our company's distribution network in this strategic market which is maritime for us. And in aviation, Etelsat signed a multi-year agreement with ANVU for capacity on Etelsat 10B to enhance high-speed in-flight connectivity services, underscoring the role of the geo-capacity within your TELSAT multi-orbit strategy. And elsewhere, we are happy that our distribution partner, SS Intelsat, entered major in-flight connectivity agreements with Japan Airlines and LATAM Airlines that will use our LEO constellation for in-flight connectivity. Our backlog now stood at 3.4 billion on June 30th versus 3.5 billion a year earlier. This is the equivalent of 2.7 times our 25-26 revenues and connectivity represented 61% of the total backlog versus 57% a year ago. As a reminder, the evolution of this backlog is reflecting the increasing weight of Leo business in the mix. And as a reminder, contracts in the Leo business tend to be shorter than the contracts we used to have in the legacy geo application. This explains this slight decrease of the backlog. Moreover, only the secured element or take-or-pays Leo contracts are recognized, while what we call PSGO Leo contracts are not reflected in this backlog. Let's now turn to our financial performance, and I will pass the floor to our CFO, Sébastien Rouge.

Thank you, Jean-François. You covered revenues in detail, so let's now jump straight to profitability. Adjusted EBITDA stood at 632 million for the year ended at the end of June compared to 666 million a year earlier. It's down 6.5%. It was down 3.1% on a like-for-like basis. Operating expenses stood at 604 million. It's up 36 million. They mainly reflected an increase in cost of goods sold for our Leo business, partially offset by the revaluation of share-based compensation schemes that we booked in H1. In terms of margin, adjusted EBITDA margin stood at 51.2% versus 54.4%, down 3.2%. points on both reported and like-for-like basis. If we look at the rest of the PNL, group share of the net result was a loss of 457 million versus a loss of 1.1 billion a year earlier. This improvement reflected lower other operating expenses of 153 million as compared to 777 million last year. As a reminder, fiscal year 25-26 included goodwill and satellite impairments totaling 720 million. We have lower DNA of 699 million versus 808 a year earlier, reflecting the positive effect from the securing of operational continuity of the LEO constellation following the procurement of additional 340 satellites. as well as the end of amortization of certain intangible assets as well as lower on-ground depreciation. We have a net financial result of minus 232 million versus minus 201 a year earlier, mainly reflecting higher interest costs, partially offset by the favorable evolution of foreign exchange gains and losses. Finally, we have a very small corporate tax charge of 1.6 million versus a small gain of 6.7 a year earlier. If we look at our capital expenditure, CAPEX amounted to 594 million as compared to 450 million a year earlier. This increase reflects the progress in the execution of LEO investment programs primarily focused on the Gen1 follow-up activities. It was below the 900 million that we originally anticipated through our first half result communication, mainly due to changes in milestone phasings and good control over geo and ground capexes. It should not be extrapolated for the future years, notably 26-27, where CAPEX is expected to be the region of 1.2 billion. In this context, the group confirms its medium-term plan, covering investments of approximately 4 billion over the period fiscal year 26 to fiscal year 29, funded by its recently completed 5 billion refinancing round. If we look now at our financing structure, at the 30th of June 26, the net debt stood at 1.46 billion, down by 1.2 billion versus the end of last year, mainly reflecting the net proceeds from the capital increase of 1.5 billion. It was partially offset by interest out and costs associated with the execution of our refinancing plan. As a result, the net debt to EBITDA ratio stood at 2.32 times compared to 3.9 times at the end of June 25. The average cost of debt after hedging stood at 4.37%, Along to an ample renewal of our financing capability, the Group was able to take advantage of the 1.5 billion capital increase which has improved its rating and credit appraisal by lenders. The Group has extended the average maturity of its debt now at 4.2 years as compared to 2.5 years at the end of 2025. We enjoy a great level of liquidity with under-owned credit lines and cash in hand at 2.3 billion, complemented by around 690 million of under-owned ECA facilities dedicated to future CapExes. Now I hand back to Jean-François for the outlook and the next steps.