Good morning, ladies and gentlemen, and welcome to the conference call to report the second quarter 2024 financial results for Telesat. Our speakers today will be Daniel Goldberg, President and Chief Executive Officer of Telesat, and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. James Ratcliffe, Vice President of Investor Relations. Please go ahead, Mr. Ratcliffe.

Thank you, Paul, and good morning, everyone. This morning, we filed our quarterly report for the period ending June 30, 2024, on Form 6-K with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements, as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and update filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.

Hey, thanks, James, and good morning, everyone. Q2 in the first six months of this year have unfolded consistent with our expectations. As a result, we're reaffirming all of our guidance for the year and keeping focused to make sure we meet those objectives. When we hosted our first quarter call in early May, we indicated we were seeking to conclude our Lightspeed funding agreements with the governments of Canada and Quebec by the end of this summer. This is obviously a key priority for us. I'm happy to say that, we've had good and sustained engagement with government representatives, and we are optimistic that we remain on track to achieve this timing. We'll make a separate announcement once the definitive funding agreements are concluded. Beyond that, we're making strong progress executing on the Lightspeed program as MDA, our Prime Satellite contractor, noted on its earnings call last week, they've now selected and onboarded 90% of the suppliers for the Lightspeed program, and they remain on track for their full year ramp-up plan. We've increased our own head count since the start of the year by nearly 20% as we stop up to execute on Lightspeed, and the team is making excellent progress on the program. As we noted in today's earnings release, our focus this year remains twofold. For our geo activities, the emphasis is on maximizing EBITDA and cash flow by doing what we can to mitigate anticipated revenue declines and rigorously managing our cost structure. And on LEO, it's all about execution, closing our funding agreements, staffing up, building out all the various elements of the Lightspeed network, including the satellites, the ground infrastructure and the software that we need and commercializing it in the key verticals we're focused on. I'm very pleased with the progress we're making in all of those areas. We're hugely bullish on our prospects in the market as well as our ability to deliver an extraordinary value proposition for our customers and significant value creation for our shareholders. With that, I'll hand over to Andrew, and then look forward to taking any questions.

Thank you, Dan, and good morning, everyone. I would now like to focus on highlights on this morning's press release and filings. In the second quarter of 2024, Telesat reported consolidated revenues of $152 million and adjusted EBITDA of $103 million. The first six months of 2024, the company generated $66 million in cash from operations, ending the second quarter with $1.4 billion of cash. For the second quarter of 2024 and compared to the same period in 2023, revenues decreased by $27 million to $152 million. Operating expenses increased by $556 million, and adjusted EBITDA decreased by $35 million to $103 million. The adjusted EBITDA margin was 67.8% as compared to 77.1% in the fourth quarter of 2023. The revenue decrease for the quarter was primarily due to reduction in services and a low rate on the renewal of a long-term agreement with a North American direct-to-home customer as well as lower revenues from certain mobility and Latin American customers. The increase in operating expenses is primarily due to higher wages and benefits our debt expense and costs associated with consulting contracts, partially offset by lower non-cash share-based compensation and higher capitalized engineering expense associated with Telesat lately. Interest expense decreased by $7 million during the second quarter when compared to the same period in 2023. The decrease in interest expense was primarily due to the repurchase of notes and Term Loan B. This was partly offset by an increase in the interest rate in the US term loan facility. In the second quarter, we recorded a loss on foreign exchange of $34 million as compared to a gain of $67 million in the second quarter of 2023. The loss for the three months ended June 2024 was mainly the result of the strengthening US dollar, the Canadian dollar…

Thank you very much. Yes, we will now take questions from the telephone lines. [Operator Instructions] We have the first question from Edison Yu from Deutsche Bank. Please go ahead. Your line is open.

Good morning. Thank you for taking our questions. First, I just want to clarify that the negotiations are on track. Are you basically saying that it will conclude in the next couple of weeks based on your kind of end of summer time line?

Yes, that's effectively right. Our expectation is that in the next couple of weeks, we will conclude the agreements and make a separate announcement about that.

Understood. And I guess, is there anything that still needs to be worked out? Or is this sort of more the right people got to make the right signatures? Or is there anything kind of outstanding.

No. As I've said in my prepared remarks, we've had really good engagement with the government representatives. These are representatives from the government of Canada and the government of Quebec. There are a good number of agreements that need to get concluded in order to document all the different features of the funding arrangements. At this point in time, there's -- I don't see any significant impediments or obstacles in getting this done in the coming weeks. And so yes, we're just -- it's a big funding arrangement with multiple agreements, and we're just working through all that, but there's nothing yes, kind of extraordinary about what remains to get done.

Got you. Switching to the guidance on the CapEx, obviously implies a pretty substantial step-up even at the low end of the range. I guess how do we think about what determines if you end up close to $1 billion, close to $1.4 billion. And what sort of [indiscernible].

Andrew, do you want to take that?

Yes, sure. But if you look at our flow of CapEx, in the second quarter, it's approximately about $309 million or so. So, if you kind of multiply that by 3, you actually get to $1 billion from a mathematical perspective. So that's why we feel pretty comfortable where we are with the range.

Yes. And maybe I would just add that it's a sign that the program is on track. I mentioned again in my prepared remarks, that MDA, who is the prime and is going to be the beneficiary of so much of our capital spending this year and next, they've done a great job of getting all their suppliers online. They're placing orders, and they're moving out exactly as we would like them to. And so yes, we felt everything we're seeing tells us that we're going to be tracking the guidance. And as Andrew said, there was a big spend in Q2, and everything we're seeing is showing good progress and that our suppliers will achieve the milestones they need to achieve in order to unlock the payments that we've sort of budgeted for.

Thank you all. I'll get back in the queue.

Okay. Thanks.

Thank you. The next question is from David McFadden from Cormark Securities. Please go ahead. Your line is open.

All right. Thank you. A couple of questions. Can you just give us an update on where you stand with respect to negotiating that one DTH customer to the contract that we're early this fall?

Yes. Thanks, David. So just for everyone's benefit, we've got a renewal with EchoStar on our Nimiq-5 satellite that comes up in early October, and we've said that on our last 2 calls, I think, that we've been engaged with EchoStar. So we're not done yet. I've mentioned before, we know EchoStar well. We have good relationship with them. We've done business with them for a very long time. So, we've certainly had a number of exchanges, but we're not done yet. So my expectation, obviously, this renewal coming up in about 2 months' time, we'll be landing on a resolution pretty soon. Certainly, I think that by the time we do our Q3 call, we'll be able to provide a lot of detail around where we landed, but at this point in time, still having discussions with them.

Okay. And maybe a couple of questions on Lightspeed. So in terms of definitive agreements, you've talked that you signed by the end of summer. Is that with both the government of Canada and the government of Quebec, because I think in the past, you were primarily referring to the Government of Canada?

Yes. No. It's our expectation that it will be with both of them. And again, that's why it's taken a little while, again, we're tracking the time frame that we had envisioned a few months ago when we put out our Q1 numbers, but because it is the government of Canada, it is the government of Quebec. We also have this vendor financing and so the -- all of that needs to get done. It takes a little bit longer than if it were one, just a purely commercial kind of funding syndicate. And two, yeah, with this government funding there are kind of special consideration. So yeah, it will be with the government of Canada, with the government of Quebec, and it all feels like it's moving in the right direction. I have to say, just because I'm a former lawyer, it ain’t over till it's over, but we're highly confident that we're going to get there in the coming weeks.

Okay. And then can you update us on your total spend to date on HP [ph]?

Andrew?

Looking at the half year, as we said, we've spent CAD334 million in total, of which cash is CAD220 million as a balance has indeed been reflected in the accounts payable that we see on the balance sheet.

And those are Canadian dollars, right, Andrew, just...

Yes, correct. Canadian dollars. Correct.

So I think the budget for HP is CAD2.5 billion. Well, that's your last number. And so that's – so you spend CAD334 million so far on the project all there?

Yeah.

Okay.

No, no, no. We -- that's just what we've done so far this year. Yes, but we've been making investments in the program for the past few years, including payments with launch providers, a lot of the nonrecurring engineering investment that got made, user terminal development just kind of across the board. So Andrew, I don't know if you want to say anything more about that?

Yeah. No, I can. If you go all the way back to the development back to 2020, on the Canadian dollar basis, looking at CapEx, it's about CAD980 million CapEx is what we have spent doing all of the work that we have done to get where we are today…

In currency?

Canadian dollars.

Okay. All right. That’s great. Thank you.

Thank you.

Thank you. The next question is from Chris Quilty from Space. Please go ahead your line is open.

So congratulations, you put up better results than I was expecting for Q2, but that we get the question, you maintain full year guidance. And so did you see anything that was pulled forward into Q2, maybe just first question.

No. No, the quarter unfolded like we expected.

All right. So I, therefore, kind of didn't model back half down as much as perhaps I should have to stay at the kind of midpoint of the guidance. But putting aside MIMIC 5, which I had already accounted for, when you look at the base of the business, are there any other large contract roll-offs or the other issues you've identified maritime in Latin America. Are those getting better or worse?

I think, look, we gave guidance at the outset of the year, like in any year, there are always puts and takes. In the main, the year has been unfolding like we expected. There were some renewals that we didn't think we were going to get that we did. There were some things that we thought would roll off in a certain time frame. We still think they're going to roll off, but they're rolling off a little bit later. And then equally, there are some things that played out in a way that was probably worse than what we thought. One of the things I'd note, and we flag it in the 6-K is our customer Xplore, which is a Canadian world broadband provider that serves its customers with a mix of satellite, terrestrial wireless and fiber. Xplore is going through a restructuring process right now. And as a result, we've bumped up our bad debt provision in the quarter, and we're trimming our expectations for what we'll do with them for the rest of this year. So I'd say that was one that we didn't anticipate when we gave our guidance at the outset of the year, but that's something that will be a bit of a headwind in the second half of the year and potentially next year as well.

And remind me, Dan, because that was -- they bought all the ViaSat and Hughes Canadian payloads for ViaSat-1 into. Do you guys were involved in the deal, if I can say, is sort of a middle man through that contract, if I remember correctly. So I wasn't expecting there was a Hughes revenue or margin contribution on that?

Yes. No, not really so. But you're right. You're right in the sense that Explorer uses satellite capacity from Telesat, ViaSat and Hughes. But no, we didn't act as a middleman for any of that. We own the payload -- I'm sorry, the Canadian payload for ViaSat-1 and we did a long-term deal with Explorer to use that payload, but they did their own direct deals with Hughes and ViaSat for their other capacity so that, that doesn't flow through our P&L.

Okay. I got it partly right.

Well, that's...

Okay.

Usually better than I do. So that's pretty good.

Second question for Andrew, I guess, spending $1 billion in the back half of the year is no small feat for the government, but for Telesat, that's a big chunk of money. And clearly, people are not building stuff at that rate. How much of that should we think of as prepayments to -- and how does that flow through MDA to the supplier base in terms of the revenue contribution on the other side, maybe if you can…?

So maybe, Chris, I'll take this one. And I won't speak to MDA's revenue recognition or I mean that -- I talked to them about that. But our suppliers need the money. They're ordering equipment right now. I mean don't forget, we're launching satellites two years from now, which means that those satellites are going to be getting built in the coming months. And so they're ordering, you name it, solar rays. I'm sitting here with my CTO, help me out, Dave.

All of the various components of the spacecraft that people are anecdote, the propulsion system, solar arrays, out to control…

100%. People are building stuff. All the supply chain is building stuff. They're ramping up, they're spending money. And as much as I would like to think that everyone wants to do tells had a great big favor. In my experience, all these companies want money before they start spending money. So that's the flow of funds. And here again, and I'm somebody that is really squeamish about spending money. But the reality is, we're hitting the schedule, and they're moving out. And the worry would be if we weren't spending the money, then our schedule to me, and to other people that know this industry, it wouldn't be credible. The reality is, yes, we're spending a lot of money over the next 24 months because people are buying stuff and building stuff, and that's exactly what's going on.

Great. And speaking of stuff, I have to ask, it's the company but also an industry question around your selection of PSAT for your optical terminal, I think you were involved with Inerac [ph] on a couple of phases of [indiscernible]. And obviously, that technology is absolutely critical to the sort of performance and economic returns you expect. Can you perhaps give us a little solely on the process there?

Yes. Sue, I'll -- and our world-class long-standing CTO, Dave Wendling, who's sitting in the room with me, but I'll take the first crack at this, Dave, and you can come around. So yes, these optical inter-satellite links are a key part of the Constellation and for everything on the Constellation, whether that's the onboard processor, the antennas, the digital antennas or these optical links, we're always trying to make the right choice between cost, capability and kind of reliability, heritage and whatnot. So, we had -- and there are a lot of folks right now that are coming forward with good optical technology in space we worked with MDA in making the selection. So, that's something else I'd note. This was kind of a joint effort -- joint determination between Telesat and MDA. And the reality is we landed on PSAT because they kind of most checked the box on those different variables; performance, reliability, cost, schedule, all of that. So, TSAT has good heritage here. They have a very good capable optical link. At the end of the day, it was a competitive process. And at the end of the day, we and MDA judge that TSAT was the best vendor for it. It's not a black mark against any of the other companies out there that are making optical links. We have a -- we felt like we had a number of good alternatives. But at the end of the day, TSAT got over the line for us. And Dave, I don't know if there's anything else.

No, I think you said it well, Dan. I just note that it was a very disciplined down selection and selection process in the final analysis in. So, as you said, key sat note on time and a very comfortable.

And final question, listening to the MDA call the other day. Clearly, you were top of heap with them, but they apparently have a new undisclosed customer that's sort of grown in size very quickly. This would lead someone to believe it might be a government customer, which tends to exert a priority. Again, all -- I'm speculating, but these are the things we've seen happen before. Do you have any concerns? I know they're ramping up to a capacity of like 2,000 satellites a year, but they're ramping up, is there a growing book of business turning for you?

So, the short answer is no. They're right down the street from us, about an hour and a half away from us. We know MDA well. Our teams are well-integrated. We've got a lot of former MDA employees here. They probably have a couple of former telesite employees on their side. We have, I'd say, a really good working relationship with MDA at all the different levels kind of throughout our organizations. We've worked with MDA for decades, not as a satellite prime principally on the antenna side and whatnot, although they've been building satellites for years and years. So no, we don't have any concern. We're in close contact with them as they ramp up their staff as they ramp up the supply chain, we -- including myself, meet with them on a regular cadence. So -- which is not to say that we're relaxed and complacent. This is a huge program for us. It's a huge program for them. Both of us need this program to be successful. I like that dynamic where we both have a lot of skin in the game. But no, I mean it's something that we're going to keep monitoring very, very closely. But no, I feel good right now about where they are on the ramp up and how our teams are engaging and the like. So -- and if we feel differently about that, we'll let you know.

Thanks.

Thanks, Chris.

Thank you. The next question is from Walter Piecyk from Lightshed. Please go ahead. Your line is open.

Thanks, Dan. Just a quick -- first, a quick follow-up on one of Chris' questions with regard to -- you had the strength in the first half of the year relative to guidance. Are you basically assuming that EchoStar is 0 in terms of revenue for the fourth quarter as they kind of work through their cash issues? Is there some probability associated with that when you put together your guidance?

Well, when we put together our guidance and we said this before, it captured a range of outcomes with EchoStar. And we haven't changed any of those assumptions in terms of what those range of outcomes could be. So no, the back half of the year and our thinking about it hasn't deteriorated because we've learned something new or our thinking has changed about EchoStar from where we stood at the outset of the year when we gave the guidance. And I guess the other thing I'd say is, yeah, we all track what's going on in the sector, including what's going on with EchoStar. The reality is, to date, the direct home satellite business is obviously still generating a significant amount of cash flow at EchoStar. To date, Nimiq-5 is being fully used by EchoStar. My expectation is to the extent that they renew with us, then that will be a reflection that Nimiq-5 is still an important part of their distribution infrastructure and they'll find a way to pay for that because it's important that they continue to provide service to their DTH customers and continue to enjoy the benefit of that cash flow. And so my expectation is that they'll find a way to make sure that their payments. So I'm just pausing here. Are we still online? Okay. Sorry, there. Our stream was flickering here. I wasn't sure if we had lost the line. So...

That was a good response. It was just flickering positive receive. Yes, I mean I agree -- I mean, look, the to generate some level of free cash flow in one element of the business, and they can't switch off in mimic price, and you got to get, why not just put a gun to their head then and just not let them off the hook for a lower renewal?

Well, I mean, look, with all of our customers, you try to -- yes, frame things in a kind of a win-win way as best you can. You don't always get there, but we've been working with EchoStar for nearly 20 years now, and we have a good relationship with them. We've talked about this before. We all know it. The direct-to-home satellite business is facing real secular headwinds. We try to work with whether it's Bell or EchoStar or Shaw try to work with them to sustain that business because there still are millions of households across North America that rely on those services. And so...

I just feel like on this renewal, however, many years it's going to be also longevity of the staff itself. So it's like this is the last one, five years from now, if there are a couple of million subs lower then they're not going to be maybe as nice to you as you're sounding like you want to be nice to them in this degree. In other words, like this could be the last negotiation of the 20-year relationship. So why not like just squeeze in for everything you can.

Yes, I don't know. We've been doing this for a long, long time. It's not how we approach our customers in the market. And so anyway, so stay tuned, we're going to conclude one way or another, our renewal discussions with them, and then we'll be able to provide an update on that in a couple of months' time.

I think that's also on the LEO, now the NDA is kind of talking about it more. Obviously, there's seemingly more confidence in the market that the project's moving forward. Has this opened up any additional pre-sales on the enterprise side? I realize, obviously, the launch is still a couple of years out, but wondering if you've got any kind of additional commitment. And to that end, in terms of the market size beyond enterprise, with Globalstar and Apple have done this recent phone, again, getting back to the directed device, I know this is not the target market that you want, but is there any rethinking in that in terms of directed device? I mean, I think Sky Go announcement yesterday with the new Pixel phone, it seems to be a market developing. I mean using the Globalstar stuff. It's been great in the whole of coverage that exists. Just curious if the thought process has changed in terms of trying to attack that market.

It's a great question. But no, it hasn't. The reality is the spectrum that light speeds operating on the Ka-band spectrum is ideal for broadband connectivity, but it's not ideal for direct device, providing a broadband connection, even a narrowband connection to a handheld smartphone. So -- and we believe the market that the verticals that we're focused on are great opportunities for us. They're large, they're deep, they're fast growing, and we've optimized the constellation to serve that market. The frequencies are really well suited to serve that market. And so no, that remains the focus. And then as far as presales activities, Lightspeed’s moving forward. I mean, if anyone still has any questions about that. Yes, I don't know what to say, but we're obviously spending money, MDA's ordering stuff, and we're all ramping up our staff. And I mean Lightspeed’s going forward, I think the customer community understands that. We've got salespeople and business development people running all around the world, engaged with the customers that we know well in these different verticals. And so nothing to announce right now. But...

I know you only announced like material contracts, but could you at least comment whether there have been incremental bookings that maybe they're not significant enough to call out -- on bookings since the last earnings call?

No. No, but it wasn't our expectation that there would be any. We're having good engagement with really good prospective users in the key verticals that we're focused on, aero, marathon, government, enterprise. It wasn't my expectation that we'd be announcing anything since putting out our Q1 numbers. But the market knows what we're building, users are excited about it. There's a clear validation that the customer community is highly receptive to LEO. You see the traction that StarLink is getting, and we think that we're bringing something really compelling to the market. So anyway, stay tuned, and we'll be very transparent about the orders we're getting right now. We've got about $750 million of take-or-pay commitments on Lightspeed, which we do not include when we talk about the CAD 1.1 billion of backlog that we report in the earnings release, the Lightspeed backlog is separate and apart from that. And we'll -- as that moves, we'll report on it, and we'll talk about the wins that we have and the like.

Great. Thank you.

Thanks.

Thank you. The next question is from Sean Mahoney from Bank of America. Please go ahead. Your line is now open.

Yes. Hi. Thanks for taking the question. First, I noticed a large working capital outflow for the restricted group and a large working capital benefit for the unrestricted group in the quarter. So just wondering, does that reflect any intercompany flows? Or is it just a coincidence that those numbers largely offset? Or did you use the remaining unsub investment capacity, as you indicated you would on the last call.

Yes. So that's the investment down from Telesat Canada as the unrestricted group. And from a timing perspective, it's just showing up top in operations. But next quarter, you'll see it down as an investment in.

Okay. Got it. Thank you. And then for GEO OpEx, Q2 was up sequentially. It seems like at least part of that was due to the bad debt expense associated with Xplore that you expand as well as higher professional fees. How should we think about run rate GEO OpEx? Should we look more sort of like Q1? Or do you expect to continue to incur higher bad debt expense with Xplore or higher professional fees for some time?

If you look at other GEO business overall, I will point out our actual EBITDA margin is 80%, which is pretty high, pretty significant. And we said on our last call, we were expecting GEO OpEx to be down 4% in our plans, and that's contained within the guidance, and that's still what we are actually sticking to now. On the bad debt, I just shared the bad debt amount debt is about $2 million to $3 million. So on the grand scale, it's not that sort of material. But as we said on our last call, in terms of OpEx, and as Dan has alluded to in spending money, we are pretty judicious on what we do and how we spend money and which is good. So as I say, that's what we said in our call, but that's review a few OpEx.

Okay. Got it. And then on the bad debt expense that you mentioned, yes, listening, it went up like $3.3 million in the quarter, so call it $1.1 million a month. Are you still recognizing revenues from Xplore and just kind of offsetting that with bad debt expense?

Yes. We are currently recognizing revenue at Xplore. They're making partial payments. So we continue to recognize revenue until we know more about what their plan is going forward.

Okay. And can you quantify like what the remaining -- what their remaining obligations are, I guess, under the contract, like how much of your backlog includes the Xplore obligations?

Yes, we'll help you out there. So John, remind me, it goes up until.

January 2027.

Yes. So it would be 25 and 26. It's probably order of magnitude, about CAD 40 million of backlog that's in that $1.1 billion. And you should also know that about one-third of that was prepayment. And so when we recognize revenue from Xplore each quarter, about one-third of it is just non-cash deferred revenue. So that's -- but that's what it is, Sean.

Okay. And then the last one. I know a few people have asked, so I'll just try one more time on the guidance. So the low end of the guidance implies second half revenues of about $240 million to be $40 million a month, and you did $305 or about just north of $50 million per month in the first half. I know that there's the renewal with EchoStar that comes up, I think I can't remember September, October. But in the past, you've said that those DTH spuds are about $70 million a year, could be more could be less. But just wondering if you could help us understand like the drop-off of at least or I guess even if you lost 100% of that EchoStar contract, it seems like you're still assuming some pretty steep declines in the rest of the business in the second half of the year. Thanks.

I'm looking at Andrew, maybe I'll take this. Yes. I guess how we thought about the year, certainly, we -- even if this renews, we expect that it will be at a materially lower rate. So we've captured different outcomes with DISH that explain part of the decline. We've got this issue with Xplore, we'll see where we land on that. So it's things like that. I'd note also, we take a look at all of our business activities periodically. We're giving consideration to selling a non-core business that we own, and that could potentially get done in the near term, so it would be impactful. For this year, it contributes revenue; it doesn't contribute a whole lot of EBITDA to us. But if we were to do that, it would weigh somewhat on the top line at least. So, it's all those kinds of things. And then, yeah, we gave a range, right? I mean, there's a low end of the range, there's a high end of the range. Andrew, do you want to add anything to that?

Yeah, indeed. If you look at the OpEx, as we know, we're hiring people, so our OpEx will be in LEO. Our investment in LEO from the people’s perspective is going to increase. If you look at our segmentation, operating expenses for the six months were about $32.8 million, and our guidance we've given for OpEx in LEO is between $80 million to $90 million. So, that will also kind of play into the overall potential increase in OpEx in the second half versus the first half. So, that plays right down to the adjusted EBITDA as well. And I will say we are prudent in what we do.

And maybe one other thing, James is pointing out to me that, now that we've broken out our GEO and LEO numbers separately, it's easier for you all to see. But we recognized revenue in LEO for the first half of the year -- and that’s chunky, non-linear kind of revenue -- with the consulting contract that we had. I think this one was with NASA.

NASA. Correct.

…which had more revenue recognition in the front part of the year than in the back part. Here again, it's not contributing a whole lot of EBITDA, but it will impact the top line. So anyway, Sean, it's all of those things. But there’s certainly nothing that, other than the exploration restructuring that's going on -- we don't know where that's going to land -- there's nothing about how the second half of the year is shaping up that's really any different than the way we were thinking about the second half of the year at the outset of this year when we gave our guidance.

And if you look at the segmentation breakout with Dan, which I think is very useful and very transparent, the numbers and the issues we just mentioned about the OpEx and the revenues in LEO, you can actually see that quite clearly, particularly pertaining to the first three months.

Okay. Got it. Thank you. And then just the last one for me, based on what you said about the net non-core assets that you mentioned, is that in the restricted group? And can you give us any sense for the order of magnitude of what you expect to sell that for? Is that like $5 million, $10 million? Or are we talking $100 million or...

Yeah, so one, it is in a restricted group. It's not -- it’s certainly not material from an EBITDA perspective, because as I mentioned, it's pretty much EBITDA neutral for us. And then, in terms of top line contribution, the order of magnitude is kind of in the 10-plus million contribution to the top line. So, that's what it looks like. Oh, and then in terms of proceeds, we can’t say yet because we don’t have anything to share yet, but it's not going to be really material. But any proceeds that we do get from that activity, if we sell it, will come into the restricted group.

Okay. Thanks, Dan and Andrew.

Okay. Thank you.

Thank you. There are no further questions registered at this time. I will turn the call back to Dan Goldberg.

Okay. Operator, thank you very much. And thank you all for joining us this morning. We look forward to chatting with you again when we release our Q3 numbers. So, thank you very much.

Thank you very much.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.