SES announced its financial results for Q1 2021. Trajectory in video improved from -8.0% YOY in FY 2020 to -4.6% YOY in Q1 2021. In addition, the company showed a solid networks performance (flat YOY) in the COVID environment with strong prospects for future growth. SES registered a 7% YOY reduction in recurring operating expenses, reflecting S&A gains, supporting higher YOY Adjusted EBITDA margin (61%). Solid cash flow generation and financial discipline were recorded, supporting lower YOY leverage ratio of 3.1 times at 31 March 2021. Adjusted net profit was up 42% YOY to €75 million.
Growth investments and C-band proceeds supported future growth and value creation. Over 85% of 2021 revenue outlook (€1,760-1,820 million) already under contract as well as $180 million of backlog signed in 2021 for SES-17 and O3b mPOWER with gross backlog at $740 million; timed to come to market as the world emerges from the COVID environment with highly differentiated products and solutions to capture substantial connectivity growth opportunity. Furthermore, US C-band clearing is on track to meet end-2021 milestone (triggering $1 billion payment) and end-2023 milestone (triggering a further $3 billion payment).
Steve Collar, CEO of SES, commented, “We have made a strong start to 2021 with the resilience of our Video business to the fore on the back of a number of important renewals and extensions secured at our core European neighborhoods. Networks business performance was also solid in Q1, notwithstanding the near-term COVID environment, with new deal flow beginning to pick up. We continue our laser focus on removing cost from the business and minimizing discretionary spend with a 7% year-on-year reduction in operating expenses, leading to improving EBITDA margin. In summary, our start to the year puts us firmly on track to deliver on our 2021 financial outlook which remains unchanged.
“I am excited by the progress that we are making in securing customer commitments for SES-17 and O3b mPOWER ahead of launch in the second half of 2021, and the level of market interest that we are seeing across all Networks verticals. These important growth investments allow us to offer a significantly expanded set of low latency products and solutions to the market as the world emerges from the COVID environment and demand for connectivity increases exponentially. We are also on course with the clearing of C-band in the US and are continuing to pursue opportunities to create additional shareholder value from further monetisation initiatives.”
He added, “The share buyback programme that we are announcing today reflects our confidence in the long-term fundamentals of the business. The current share price does not reflect the underlying value of SES and this programme represents an attractive opportunity to deploy capital for the optimal benefit of our shareholders. SES is uniquely positioned with targeted and differentiated growth investments fuelling future top line and EBITDA growth with strong cash flow enhanced by meaningfully lower capital expenditure, as well as the proceeds from our C-band initiative.”