What happened

This is the day that Intelsat (OTC:INTE.Q) shareholders have waited for. At long last, Intelsat stock is going up for a reason that investors can easily understand: earnings.

This morning, shares of the satellite communications concern jumped 8% (as of 11:55 a.m. EST) in response to fiscal fourth-quarter earnings results that exceeded expectations. Admittedly, Intelsat exceeded those expectations as it lost money -- but at least it lost less than expected.  

Satellite transmitting to Earth

"Hey, Houston! Did Intelsat just say it might get more money?" Image source: Getty Images.

So what

So what exactly did Intelsat report this morning?

For fiscal Q4, Intelsat lost $0.81 per diluted share on sales of $517 million. That doesn't sound great at first, but when you consider that Wall Street had predicted a bigger loss ($0.94) on smaller sales ($500.9 million), the quarter was clearly a "win" for Intelsat.  

Sales declined 5% year over year, yet Intelsat's per-share loss was flat against year-ago numbers.

For the full year, sales of $2.1 billion likewise fell 5%, while losses swelled 41%. Here, too, it appears that Intelsat made progress in Q4, by slowing the rate at which it loses money. Management also noted that Intelsat generated positive free cash flow for the year -- $70.2 million.

Now what

Looking ahead, three things stand out.

First, new guidance for fiscal 2020 anticipates somewhere between $1.93 billion and $1.98 billion in revenue. That's not particularly good news given that Wall Street is hoping to see Intelsat book $1.98 billion -- period. Intelsat's guidance range suggests that hitting that target is no sure thing.

Second, Intelsat updated its guidance for future capital spending:

  • $200 million to $250 million in 2020;
  • $225 million to $300 million in 2021; and
  • $225 million to $325 million in 2022.

Without knowing cash flow, we can't figure an exact free cash flow for any of these years -- but just knowing the capital expenditure numbers is a start.

Finally, Intelsat confirmed today that the FCC is offering it about $4.85 billion in proceeds from the planned sale of C-band spectrum currently controlled by Intelsat. Consider that a starting position, though, because Intelsat is working "on successfully improving the draft order proposed by the FCC while preserving all our rights."

Translation: Intelsat could get more than $4.85 billion.

And the more it gets, the higher Intelsat stock should go.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.