Q4 2011 Loral Space and Communications Inc Earnings Conference Call
Mar 01, 2012 AM EST
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
LORL - Loral Space & Communications Inc
Q4 2011 Loral Space and Communications Inc Earnings Conference Call
Mar 01, 2012 / 04:00PM GMT
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Corporate Participants
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* Wendy Lewis
Loral Space and Communications Inc - Director of Communications
* Michael Targoff
Loral Space and Communications Inc - CEO
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Conference Call Participants
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* Michael Broudo
Miller Tabak - Analyst
* Jason Stan
Cleaton - Analyst
* Jeremy Kahn
Cole Street - Analyst
* Eugene Lee
Regiment Capital - Analyst
* John Goodman
Seven Locks Capital - Analyst
* Adam Ritzer
CRT Capital Group - Analyst
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Presentation
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Operator [1]
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Good day, everyone. Welcome to the Loral Space & Communications fourth quarter and year-end results conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today's conference is being recorded. Now I would like to turn the conference over to Wendy Lewis, Director of Communications.
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Wendy Lewis, Loral Space and Communications Inc - Director of Communications [2]
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Good morning, everyone. Thank you for joining us today. As we proceed with the call some of the remarks we make about our future expectations, plans and prospects will be forward-looking statements under the Private Securities Litigation Reform Act of 1995. As you know actual results may differ materially from those discussed here as a result of a wide variety of factors and conditions. Please refer to the most-recent 10-K and 10-Q forms that we've filed with the SEC for information on those factors and conditions. I'd also like to point out that during the call, when we discuss EBITDA, we are referred to adjusted EBITDA as we regularly define it in our filings. Also note that Loral reports Telesat results in US dollars. So when we refer to Telesat results during the call, they will be in US dollars and in accordance with US GAAP. Now, I would like to turn the call over to Michael Targoff, Chief Executive Officer of Loral Space & Communications.
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Michael Targoff, Loral Space and Communications Inc - CEO [3]
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Good morning, everyone. With me today are some of Loral's Senior Executives, including our CFO, Harvey Rein; our Treasurer, Richard Mastoloni; and our Controller, John Capogrossi. Tuesday night we filed our 10-K and announced our financial results for the year and the fourth quarter of 2011. As in the past, I will review the year, draw your attention to some important highlights, and discuss our current status. I'm going to assume that everyone has read the press release and reviewed the 10-K, so rather than reading a lot of detailed numbers, I will stick to an overview. 2011 was a good year for both Telesat and SS/L. The solid performance reinforced the benefits of the continued improvements we have achieved. Telesat deliver the predictably good results that we expect, and SS/L's results, even with the softer bookings, were consistent with the strong performance of the prior years. Thus I can confirm that we are right on track with our plans to create an increasingly more valuable space business.
More specifically about SS/L, reflecting the benefits of the cost efficiencies and long-term growth initiatives that we have implemented, EBITDA margins in the 12% range continue to be strong. Our market share, confirming our leadership position in the industry, resulted in our capturing nearly 50% of the mid-to large-sized satellites that were competitively bid during the year. Industry-wide, there were just 18 commercial satellite contract towards in 2011, compared to a typical year of 21or so, and the large number of 27 in 2010. Of the 18 commercial satellite contracts last year, just 14 were competitively bid, and one of those was too small for us to pursue. In addition to the six contracts we were awarded in 2011, the pipeline that we have talked about also results in three satellite awards in the first six weeks of 2012. We believe bookings this year will be strong, providing the foundation for future good performance.
From a long-term perspective, in 2011 there were a number of important indicators of SS/L's health that are noteworthy. Factory performance was very good. We invested additional resources in research and development and bid and proposal activities for future growth. Our backlog at the end of 2011 was robust at $1.4 billion, and that is without the benefit of the three awards that we've already announced this year. SS/L's liquidity was also strong, with $120 million in total cash and with still $150 million undrawn under our revolver. And finally, our large high-powered high-throughput platform continued to be well-positioned for the demand that we see in the pipeline.
In terms of our actual contract awards in 2011, in the fourth quarter, just before the successful launch of AsiaSat 7, SS/L was awarded two more contracts for satellites AsiaSat. The satellites will provide service in Asia, the Middle East, and Australia. Follow-on orders like this from AsiaSat are clear endorsements of SS/L's ability to meet customers' expectations. Other contract awards in 2011 included the two large and powerful direct-to-home television satellites for our long-standing customer INTELSAT, which will be used by DIRECTV Latin America, a multi-mission satellite for Telenor of Norway, which will provide both broadband and broadcast services in Central Eastern Europe, and a broadcast satellite for Australian operator SingTel Optus, which will provide service in Australia and New Zealand.
As I referred to earlier, in 2012 SS/L booked the three additional supply contract awards. In January, we announced an award for an established satellite operator whose identity is being withheld at the request of the customer. Then in February, confirming our leadership position in providing high-throughput broadband satellites, SS/L was awarded a $600 million contract by NBN Co, the Australian government entity responsible for their national broadband network. The contract is for two large broadband satellites and related activities. We believe the Australian government's vision in looking to satellite as a cost-effective approach to providing broadband access across large, sparsely-populated regions may well be a harbinger for further requirements around the globe.
In terms of launches in 2011, SS/L completed and delivered four satellites, including Viasat1, the world's highest-capacity broadband satellite, which went into service at the end of the year and is performing well. Viasat1 was extremely large and complex. The successful construction and launch of this satellite is very noteworthy achievement. And, notwithstanding the recently-filed intellectual property dispute with ViaSat, we're very proud of the hundreds of SS/L employees who applied their special technical expertise to make this demanding project such a success. Other satellites launched during the year include AsiaSat 7, Quetsat, which is a broadcast satellite that we build for (inaudible -- technical difficulties) and Telesat. Earlier this month was our first launch for 2012 with a satellite for SES, which is now the largest satellite in its fleet.
Regarding SS/L's margins going forward, I want to reiterate what I've said on previous calls. The strong margins that we had in 2010 and 2011 were based on obtaining orders for the large powerful satellites that sustain our factory loading and efficiency efforts. Even with six contracts awarded in 2011, the pacing of the orders and the smaller average size of the satellites will have an impact on revenue and EBITDA in 2012 and into 2013 as those satellites pass through the factory. As I said last quarter, based on our current outlook and assuming no unusual positive or negative events, we expect the next two years to deliver EBITDA margin more likely in the 8% to 10% range. Looking longer term and considering the strong bookings start for the year, we would expect margins to revert back to a more normalized 10%-plus range in 2014.
As you know, ViaSat filed a patent infringement complaint against us and SS/L. While it is early in the process, based on our current knowledge, we do not expect this lawsuit to have a material effect on the Company. We believe that our conduct was consistent with and in due regard for any applicable valid intellectual property rights of ViaSat. We also believe we have notorious defenses and indeed counterclaims to ViaSat's patent infringement claims. However, given the situation, I decided that I could no longer serve on the ViaSat Board of Directors and stepped down from that position last week.
On the strategic front, as all of you well know, we have been working towards a spin-off of SS/L and previously formed a special committee to work out the capital structure issues that are involved to accomplish that spin. However, another strategic alternative has now arisen that justified the Company to ask the special committee to defer work on its assignment while we explore that opportunity. We understand that certain investors have been disappointed that it has taken us as long as it has to separate SS/L from Loral, but we believe it will be imprudent if we did not take the necessary time to fully explore this other potentially more attractive opportunity. It is our goal to achieve the maximum return for shareholders, and we will continue to be deliberative in how to proceed to achieve this objective. This is all I am going to say on this subject at this point, but of course we will be sure to disclose details as they become appropriate for disclosure.
As respect to Telesat, Telesat reported last week, and the Company increased its revenue, reduced its expenses, grew its EBITDA and operating margin, and further improved its leverage ratio in 2011. Telesat launched and brought into service two new satellites and made good progress in building two new additional satellites that expect to be launched this year. It demonstrates the consistent dependable results we've come to expect, and Telesat positions itself well for additional growth going forward. In 2012 and 2013, when the satellites recently launched and those currently under construction begin to produce incremental revenue, we would expect to see the growth that is associated with fleet expansion and that we have seen in the past with Telesat.
The backlog at Telesat remains strong at $5.3 billion, and the Company had $272 million in cash with $150 million of borrowing available under it's revolver. Telstar 14R entered commercial service in August and Telesat has made good progress leasing out its incremental capacity, which is still approximately 30% more than the satellite it replaced despite the solar array anomaly at launch. Telesat was paid an insurance payment of about $130 million in December relating to this anomaly.
Further contributing to growth at Telesat is the Canadian capacity and ViaSat1, which I mentioned was successfully launched in October, and entered commercial service in mid-December. The capacity is fully-leased to Xplornet, which provides broadband service in rural Canada. The benefit from ViaSat1 and Telesat 14R should be seen in the first half of 2012, although the impact of this growth will be somewhat lessened by a contractual reduction of revenue on one of Telesat's North American direct-to-home satellites.
There will be more growth in the second half of 2012 and in 2013 as a result of the launches of Nimiq 6 and Anik G1. Nimiq6 is expected to launch in this quarter coming up, and it is fully leased to Bell TV for direct-to-home service in Canada. While it will replace Nimiq 1, it should nearly double the revenue from that satellite. Anik G1 is expected to be launched in the second half of this year. This is a multi-mission satellite that is contracted in part to shore direct for direct-to-home television service in Canada and it also will provide expanded service to Latin America. In addition, it has a small fully contracted X-band pay load for government services. A small portion of the satellite is a replacement for 12 C-band transponders on Anik F1 and the remainder will account for incremental revenue.
Regarding the recapitalization of Telesat, as Telesat announced last week, market conditions have improved and we are preparing for new financing. This will include borrowing about CAD533 million in additional financing to Telesat's current loans. We would use that additional borrowing and Telesat cash balances to make a distribution of approximately CAD705 million to Telesat's shareholders and option-holders. Assuming completion of the financing, approximately CAD420 million will be paid to Loral. Upon the distribution, we will evaluate all the alternatives for the use of funds including stock repurchases and/or dividend to shareholders. I should point out that the contracted growth that should result from Nimiq 6, Anik G1, and ViaSat1 provides a cushion for Telesat taking on this additional borrowing without impacting its ability to fund future growth initiatives and continue with leverage reduction.
In closing, I want to remind you that the satellite industry provides very important services for people all over the world. In addition to the various entertainment services people have become accustomed to, satellites improve people's lives by augmenting education and health care in remote areas, they provide emergency communication services when natural disasters effect our terrestrial infrastructure, and create new opportunities for economic development. Satellites are also crucial to real-time news reporting from anywhere in the world, and as we pull back our troops from overseas, our government will continue to rely on commercial satellites for the military defense of the US and our allies.
The satellite industry is strong and continues to grow. The research firm IDC estimates that the total amount of global data is expected to grow to 2.7 zettabytes during 2012, up 48% in just one year. Just so those of you don't start counting with your fingers, for those of you who, like me, are not math wizards, a zettabyte is 1 sextillion bytes. It is the next order of magnitude after exabytes and means 10 to the 21st power of the bytes. This worldwide expansion explosion of digital content is driving growth in both terrestrial and satellite infrastructure, and to keep pace with the demands of the social media minute-by-minute communications and exceptional video experience. I continue to believe that Loral is very well-positioned to benefit from these trends. With that, I'll turn the call over to the operator so that you can ask if there are questions that we can respond to.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Michael Broudo, Miller Tabak.
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Michael Broudo, Miller Tabak - Analyst [2]
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I was just wondering if you could talk about how far along you are in resolving the type of stock that would be issued to MHR in a potential spin? And if this new strategic alternative that you've been presented with has the same types of issues?
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Michael Targoff, Loral Space and Communications Inc - CEO [3]
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There are no issues with respect to the alternative. And regarding the status of the discussions, the committee and MHR are in the middle of discussions, whether it was near the end of are closer to the middle or not, I'm just not going to speculate. But it certainly was not in the beginning.
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Michael Broudo, Miller Tabak - Analyst [4]
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So you're saying the current alternative does not have any issue regarding whether it is voting and non-voting?
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Michael Targoff, Loral Space and Communications Inc - CEO [5]
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That's correct.
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Michael Broudo, Miller Tabak - Analyst [6]
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Okay, and one other follow-up question. You talked about the alternatives you have regarding the dividends paid to Loral and whether it's a stock buyback or a distribution. Can you just talk about what might influence your decisions one way or another?
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Michael Targoff, Loral Space and Communications Inc - CEO [7]
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Sure. I said I think in a previous call that there are three things one might do with cash. One is obviously invest it in growth initiatives. And if we saw growth initiatives that were worthy of that investment, that is obviously the first thing we would look at. But assuming we have not identified anything of that nature and are there no other extraordinary needs for the money, we would recommend to the Board that we look at a combination of stock, repurchase and dividend. And as you can see by our report in the K in terms of how difficult it was for us -- difficult may be the wrong word, but how little we were able to buy of Loral stock, I would think that the predominant recommendation that I would make, and I have not done this yet, but would be for a dividend rather than stock buyback. Even though my normal inclination would be to buy back as much stock as I could. But in this case, given the constraints on liquidity and the inability to purchase large amounts of stock, I think my recommendation, as I said, would be leaning more towards dividend.
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Michael Broudo, Miller Tabak - Analyst [8]
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Great, thank you.
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Operator [9]
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Jason Stan, Cleaton.
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Jason Stan, Cleaton - Analyst [10]
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I was just wondering if the Telesat Explorer contract, is it variable at all with regard to subs, or is that just a fixed-rate they receive every year?
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Michael Targoff, Loral Space and Communications Inc - CEO [11]
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It is a fixed-rate.
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Jason Stan, Cleaton - Analyst [12]
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Okay, great. And when you mentioned the buyback, that your inclination would be to buy back stock, is that price-dependant or is it just in general you would rather take in the shares?
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Michael Targoff, Loral Space and Communications Inc - CEO [13]
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No. Normally I think obviously you want to make sure that you are buying the stock at a price you think is a good investment for the Company, but that was a given. If our stock was trading at $300 a share, I would not be recommending buying stock back. But the assumption is, assuming you believe it is a good value, you still have to have a liquidity that makes that purchase make sense versus giving the cash back to the stockholders.
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Jason Stan, Cleaton - Analyst [14]
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Okay. And then lastly, on leaving ViaSat's Board seems to make total sense. We you compelled to sell the shares also? Or is that a statement you are trying to make about the valuation or your position relative to them?
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Michael Targoff, Loral Space and Communications Inc - CEO [15]
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No. I think you can think about whether I was compelled or not. It just seemed to me that it was appropriate, in light of the fact that Loral and ViaSat are in a very adversarial proceeding, for me not to have an economic interest that would be contrary to my fiduciary obligations to make the results as best as possible for Loral. Historically, every time there was a Loral transaction contemplated by ViaSat, I've obviously recuse myself, but it was always one where it was clear that it was a win-win for both companies. This dispute does not seem to fit that model. So I am being more careful and cautious and just trying to stay out of any of criticism of right or wrong. It just seemed the right thing to do was to sell my shares.
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Jason Stan, Cleaton - Analyst [16]
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Okay, that does make total sense. I didn't think about somebody saying, well, you have an interest on the other side, and economically, even though you're not on the Board, that makes a lot more sense. Thank you.
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Operator [17]
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Jeremy Kahn, Cole Street.
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Jeremy Kahn, Cole Street - Analyst [18]
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I was wondering if you could just speak on the revenue growth that you expect in SS/L for the year, given where the backlog is?
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Michael Targoff, Loral Space and Communications Inc - CEO [19]
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Well, we believe it is going to be a very healthy booking year. The bookings last year, industry-wide, as I said, were on the lean side. Certainly there is reversing to the norm, and assuming the requirements continue to suggest that many customers value the high-power larger satellites, we would think and hope that it would be a year that we are pleased with. I am not going to predict the exact amount, but we had a good start.
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Jeremy Kahn, Cole Street - Analyst [20]
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And in terms of the revenue that you would recognize this year, is that going to be low single-digit growth? Is that the right way to think about it?
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Michael Targoff, Loral Space and Communications Inc - CEO [21]
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It is a function of timing of the awards when they come in and how they pass through. Again, I've said that you really have to look at this business not on a quarter-by-quarter basis.
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Jeremy Kahn, Cole Street - Analyst [22]
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Got it. And then just on the strategic front, it sounds like from your disclosure, you've suspended the decision to spin. Can you explain that a little bit more? Are you actively working with bankers? Is there a sale process started?
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Michael Targoff, Loral Space and Communications Inc - CEO [23]
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No, I'm not going to say anything more. I think what I said is something has arisen which we think is potentially more beneficial to the shareholders to pursue and focus on. And I asked the committee and MHR to suspend because I think it continuing their activity in a vacuum does not lead to a good result. So it is straightforward.
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Jeremy Kahn, Cole Street - Analyst [24]
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Got it. From a tax perspective, if there was an acquisition or sale of SS/L, what would the tax consequences be?
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Michael Targoff, Loral Space and Communications Inc - CEO [25]
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It depends on the level of the price. I've talked about what it would be. In fact, if that is what is going on, and I'm not commenting either way about that, you'd have to go back and look at the price versus the basis and how it is structured and just the way any transaction is looked at.
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Jeremy Kahn, Cole Street - Analyst [26]
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Got it. And then lastly, would there be any governance hurdles? You talked about the special committee. Would there be any governance hurdles if -- and again, not asking you to say if a deal is what is in the offing, but would there be any governance issues from doing a transaction or a sale with SS/L?
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Michael Targoff, Loral Space and Communications Inc - CEO [27]
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I'm not -- I can't think of any governance issue that would impact this alternative, should we follow through on it.
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Jeremy Kahn, Cole Street - Analyst [28]
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Understood. When was the decision made to switch tracks? We have been shareholders for a long time, and we're frankly a little bit frustrated with the lack of direction or clarity. It feels like we are changing tacks again. When was that decision made, and when do you think we might have a sense of what direction we are headed in?
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Michael Targoff, Loral Space and Communications Inc - CEO [29]
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It was made subsequent to my last call with you folks. And I would hope to have clarity on it before my next call.
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Jeremy Kahn, Cole Street - Analyst [30]
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Thank you very much.
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Operator [31]
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Eugene Lee, Regiment Capital
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Eugene Lee, Regiment Capital - Analyst [32]
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I don't want to harp on the strategic front, but when you talk about other alternatives, is there any tie-in at all with respect to the recap at Telesat and potential proceeds coming back? Or is it totally, totally different?
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Michael Targoff, Loral Space and Communications Inc - CEO [33]
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Totally independent from.
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Eugene Lee, Regiment Capital - Analyst [34]
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Okay, got it. And then on the Telesat recap, just two questions on there. I know that you have historically talked about not wanting to saddle the Company with in particular non-call provisions. I'm assuming that whatever recap happens there is really just with bank debt or other paper that is not subject to non-call provisions. Second, I'm just curious about the timing, the bank debt market is pretty hot right now. I am wondering, given that you have considered doing that, or at least publicly announced that you'd consider doing a recap, why you wouldn't just be the market today?
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Michael Targoff, Loral Space and Communications Inc - CEO [35]
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I think Dan in his call, Dan Goldberg in his call, was that we were moving with dispatch and expect it to and hope that the transaction will be completed in a matter of a month or two. So a couple of months. I think we're moving very quickly.
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Eugene Lee, Regiment Capital - Analyst [36]
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And then just on the question on the bank debt. It is likely to be -- it's going to be a bank-debt-oriented financing? You're not going to have bonds in there?
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Michael Targoff, Loral Space and Communications Inc - CEO [37]
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We are not contemplating any debt that would have bonds or no-call provisions.
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Eugene Lee, Regiment Capital - Analyst [38]
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Got it. And then on the share buyback, I notice on the K that you purchased roughly 135,000 shares out of the 800,000-share authorization. If you could remind me, does the 800,000-share buyback -- is there an expiration date attached to that? Or is it just subject to your discretion as to when and how you use that?
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Michael Targoff, Loral Space and Communications Inc - CEO [39]
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Well the Board will consider every time we meet, whether we should extend it, continue it. There is no expiration by its terms. It is just the Board's decision whether to keep it in the marketplace, we bought then we went into a quiet period, obviously, and so we couldn't, but it is something that is looked at all the time.
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Eugene Lee, Regiment Capital - Analyst [40]
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Is the presumption that given the current levels of the stock that you'd like to use as much of that is possible over the course of the next, call it, six months to a year?
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Michael Targoff, Loral Space and Communications Inc - CEO [41]
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If you're asking me would I want to be a buyer at $70? Is that what you're asking me?
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Eugene Lee, Regiment Capital - Analyst [42]
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I guess, yes.
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Michael Targoff, Loral Space and Communications Inc - CEO [43]
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I think that is a Board determination. I would tell you my personal view is, I would be happy to be a buyer at $70. But that is a Board determination.
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Eugene Lee, Regiment Capital - Analyst [44]
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Got it. Great, thanks.
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Operator [45]
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John Goodman, Seven Locks Capital.
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John Goodman, Seven Locks Capital - Analyst [46]
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I just wanted to come back to the SS/L strategic process for a second. I understand that you guys are going down the path of trying to figure out if there's something better to do than spin-off the asset, and that is obviously great for shareholders if it turns out that way. But we are little perplexed as to why you'd need to suspend the work of the special committee. The two don't seem terribly mutually exclusive to us, and it seems like if anything, it would just slow things down to the extent a transaction does not end up happening. Can you help us understand better?
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Michael Targoff, Loral Space and Communications Inc - CEO [47]
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I disagree with you. That's all. And I think the Company disagrees. We thought it was the best thing to do. People can have different points of view. Clearly it's a judgment question, and the judgment was that it was better to suspend the efforts, to defer, than it was to continue it.
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John Goodman, Seven Locks Capital - Analyst [48]
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All right, but I will share that if there has been one frustration of the shareholder base broadly, it has been that the process is heading towards the two-year anniversary and we all think that the assets are worth significantly more than where they have been trading its certainly more than when they're trading now. But we just need to get there, so hopefully we will.
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Michael Targoff, Loral Space and Communications Inc - CEO [49]
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I agree with you in terms of the delay, and it is unfortunate. But I think every step of the way has been for reasons of enhancing shareholder value, and not for any other agenda.
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Eugene Lee, Regiment Capital - Analyst [50]
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Great.
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Operator [51]
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(Operator Instructions) Adam Ritzer.
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Adam Ritzer, CRT Capital Group - Analyst [52]
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(technical difficulty) just so you know. My questions have to do with the taxation on the dividend. Is the dividend that you guys received from Telesat taxable to Loral?
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Michael Targoff, Loral Space and Communications Inc - CEO [53]
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I'm going to repeat your question because the connection was very bad and maybe others didn't hear. The question was, assuming we got this distribution from Telesat, would Loral Corporation have a tax? I think I have made clear from earlier calls that at the level we are talking about here, it would not be taxed at the Loral level.
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Adam Ritzer, CRT Capital Group - Analyst [54]
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My other question has to do with the dividend that you pay out from Loral to shareholders. Is there a chance or chances on that or is there may be some kind of return of capital situation that I'm not familiar with?
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Michael Targoff, Loral Space and Communications Inc - CEO [55]
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It depends on the level of earnings and profits, as I understand it, that we have. I don't have the numbers right in front of me, but it is either going to be at the dividend rate or reduction of capital. If you have no basis, obviously then would be -- if it were a reduction of capital, you'd take it is a to capital gain. But that is on each shareholder-by-shareholder basis. Let me see, does anybody here that knows what earnings and profits is right off the bat? We will try to call it out in our -- we'll try get that information out to everybody, certainly by the time we make the dividends, we would, of course.
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Adam Ritzer, CRT Capital Group - Analyst [56]
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Okay, then my last question has to do with the cash on your balance sheet. You are sitting there with roughly $200 million. I don't know how much of that you exactly need. But if you don't need all of that, would you potentially take the cash distribution from Telesat, add that to your balances and make a potentially bigger dividend distribution if you go along that path?
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Michael Targoff, Loral Space and Communications Inc - CEO [57]
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Well, at the time we decide, if we decide to make a dividend to our shareholders, we will examine the level of cash both in SS/L and Loral Corporate, and decide if there is an ability of what to do with it to make the most beneficial results for our shareholders. So clearly there is no prohibition, Adam, but we have not decided exactly at whatever level.
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Adam Ritzer, CRT Capital Group - Analyst [58]
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Okay. So you're not saying if you need to keep all of that $200 million? I wasn't clear.
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Michael Targoff, Loral Space and Communications Inc - CEO [59]
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I'm not -- I'm sorry, your question was do I -- saying now do we need to keep it? No, I'm not saying that we need to keep it. I am saying that we will look at circumstances when it occurs. And we will look to see if there quote, excess, close quote, cash that would be wise for us to either use for buying back stock or paying the dividend. By the way, I have the information. The dividend at that level would all be dividend and not return of capital.
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Adam Ritzer, CRT Capital Group - Analyst [60]
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Okay, all right. I'm done. Thank you very much.
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Operator [61]
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Michael Brouno, Miller Tabak.
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Michael Broudo, Miller Tabak - Analyst [62]
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I'm wondering if this new strategic alternative regarding SS/L does not result in a transaction, if you are committed to than revisiting the spin-off at that point?
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Michael Targoff, Loral Space and Communications Inc - CEO [63]
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Absolutely.
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Michael Broudo, Miller Tabak - Analyst [64]
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Great, thank you.
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Operator [65]
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Thank you. There are no further questions in the queue. I'd like to turn the call over to Mr. Targoff for any closing remarks.
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Michael Targoff, Loral Space and Communications Inc - CEO [66]
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I just want to thank everybody for joining us today. I do empathize with the concerns some of you have that things have taken a little bit longer than we hoped, and sometimes directions change. I will reiterate that whenever there's a decision to pursue something different from what all of us were pursuing the day before, it is only for very good reasons. So hopefully that will be understood by all. And thank you again, and I look forward to our next opportunity to update you on our status.
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Operator [67]
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Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.
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