What happened

Intelsat (NYSE:I) stock closed 33.4% higher on Tuesday -- after being up as much as 41.9% at one point during the day -- after the satellite operator reported fiscal Q1 2018 earnings.

Er, make that Q1 2018 losses. Intelsat lost $0.56 per share in Q1 -- much worse than the $0.41-per-share loss that Wall Street had expected. First-quarter sales of $543.8 million exceeded analyst expectations for $520.5 million in revenue. However, this "sales beat" appears to owe to an accounting change that added $25.1 million in sales  from a "significant financing component."

Satellite transmitting to Earth

Intelsat beamed down a loss today -- but guidance remains intact. Image source: Getty Images.

So what

Regardless of how it came about, the larger sales number put Intelsat in positive territory for sales growth, with its revenue rising 1% in comparison to last year's Q1. The quarterly loss, on the other hand, was nearly twice as bad as last year, when Intelsat lost "only" $0.29 in Q1.

On the plus side, Intelsat did generate positive free cash flow last quarter. This was despite the fact that operating cash flow was nearly halved to $80.8 million. Capital spending fell by more than half, to just $68 million, leaving Intelsat with a $12.8 million cash profit for the quarter.

Now what

Looking forward, Intelsat reaffirmed previous guidance, saying investors can expect it to produce between $2.06 billion and $2.11 billion in sales for full-year fiscal 2018, in line with Wall Street's predicted $2.08 billion. Intelsat also reaffirmed its capital spending plans for the next three years:

  • 2018: $375 million to $425 million
  • 2019: $425 million to $500 million
  • 2020: $375 million to $475 million

If these numbers hold true, Intelsat appears to be on track to grow its free cash flow strongly, despite the quarterly loss.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.