Attached files
file | filename |
---|---|
8-K - FORM 8-K - ORBCOMM Inc. | c16839e8vk.htm |
Exhibit 99
ORBCOMM ANNOUNCES FIRST QUARTER 2011 RESULTS
- Service Revenues, excluding AIS, Increased 19.7% -
- Approximately 14,000 Net Additions, Total Subscribers Grew 12.1% Over Last Year-
- Approximately 14,000 Net Additions, Total Subscribers Grew 12.1% Over Last Year-
Fort Lee, NJ, May 10, 2011 ORBCOMM Inc. (Nasdaq: ORBC), a global satellite data communications
company focusing on two-way Machine-to-Machine (M2M) communications, today announced financial
results for the first quarter ended March 31, 2011.
The following financial highlights are in thousands of dollars, except per share.
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Total Revenues |
$ | 7,883 | $ | 7,417 | ||||
Service Revenues |
$ | 7,397 | $ | 6,882 | ||||
Product Sales |
$ | 486 | $ | 535 | ||||
Operating Income (Loss) |
$ | (722 | ) | $ | (368 | ) | ||
Net Income (Loss) attributable to ORBCOMM Inc. |
$ | (731 | ) | $ | (735 | ) | ||
Net Income (Loss) per Common Share |
$ | (0.02 | ) | $ | (0.02 | ) | ||
EBITDA (1) (3) |
$ | 531 | $ | 673 | ||||
Adjusted EBITDA (2) (3) |
$ | 799 | $ | 1,250 |
(1) | EBITDA is defined as earnings before interest income (expense),
provision for income taxes and depreciation and amortization. |
|
(2) | Adjusted EBITDA is defined as EBITDA, adjusted for stock-based
compensation expense and noncontrolling interests. |
|
(3) | A table presenting EBITDA and Adjusted EBITDA, reconciled to GAAP Net
Loss, is among other financial tables at the end of this release. |
Total Revenues for the quarter ended March 31, 2011 were $7.9 million, an increase of 6.3% from the
first quarter of 2010. Service Revenues for the first quarter of 2011 increased 7.5% to $7.4
million from the comparable period of 2010. As previously reported, ORBCOMMs AIS service has been
interrupted and we are expecting to restore commercial service with the launch of multiple new
satellites this year. The impact of the interruption in the first quarter versus the prior year
amounts to $0.7 million less revenue in the current period. As a result, Service Revenues,
excluding AIS revenues, increased 19.7% versus the first quarter of 2010. Product Sales declined
9.2% in the first quarter to $486,000 from $535,000 in the first quarter of 2010.
Costs and Expenses in the first quarter of 2011 were $8.6 million, representing a 10.5% increase
compared to the same period in the prior year. The higher costs are largely associated with
Acquisition-related costs of $257,000 and severance costs of $137,000 in the first quarter of 2011
and reversal of bad debt reserve of $220,000 in the first quarter of 2010. Excluding the impact of
these items, Costs and Expenses increased 2.6%, or $0.2 million.
Operating loss for the first quarter ended March 31, 2011 was $722,000 compared to a loss of
$368,000 in the first quarter of 2010.
Net Loss attributable to ORBCOMM for the first quarter of 2011 was flat compared to the Net Loss
attributable to ORBCOMM for the first quarter of 2010 at $731,000 versus $735,000, respectively.
Net Loss per share in both the current and prior year periods was $0.02 per share. The Company
achieved positive EBITDA for the first quarter of 2011 of $531,000. Adjusted EBITDA for the quarter
was $799,000 versus $1.3 million in the first quarter of 2010.
At March 31, 2011, there were approximately 589,000 billable subscriber communicators, a 12.1%
increase over the first quarter of 2010. Net subscriber additions during the quarter were just
under 14,000, comprised of nearly 11,000 satellite additions and over 3,000 terrestrial additions.
Increased data usage and improved satellite throughput from our constellation over the past year
coupled with continued double-digit growth in subscriber additions has driven growth in Service
Revenues of almost 20% over the prior year, excluding AIS revenue, said Marc Eisenberg, ORBCOMMs
Chief Executive Officer. Additionally, ORBCOMM anticipates closing the StarTrak acquisition
shortly, which we expect to have a positive impact on 2011 revenue and accretive to cash in 2012.
We are pleased with the continued growth in Service and Total Revenues that are outpacing the
decline in revenue from the AIS business in the first quarter of 2011 versus the prior year
quarter, said Robert Costantini, ORBCOMMs Chief Financial Officer. ORBCOMM was able to generate
$799,000 in Adjusted EBITDA for the first quarter. We remain focused on controlling costs and
growing our top line.
Business Highlights
Selected recent business highlights include:
| ORBCOMM added a major global diversified manufacturer of cranes and lifts. We signed
an extension renewal with one of our largest current transportation VARs and a teaming
agreement with Vodafone. |
| ORBCOMM is now authorized to provide two-way satellite data communications services
in Ecuador, an important geographic area for many of our customers. ORBCOMM continues
to expand its global authorizations, which totals over 100 countries and territories.
International expansion is a key component to future growth at ORBCOMM as it provides
our customers, many of which already have distribution in these countries, a new outlet
to provide ORBCOMM enabled services. It also creates an opportunity for new sales
channels with local providers. |
| L-3 Telemetry West, a division of L-3 Communications, has delivered an upgraded,
more capable satellite operations control system (SOCS) for ORBCOMMs Network Control
Center in Dulles, Virginia. The new SOCS will support the ongoing operations of
ORBCOMMs existing constellation of low-Earth orbit satellites, as well as ORBCOMMs
new enhanced-capability Generation 2 (OG2) fleet replenishment satellites that will
begin launching later this year. |
2
Financial Results and Highlights
Revenue
Total Revenues for the first quarter of 2011 were $7.9 million, an increase of 6.3% from the first
quarter of 2010. Service Revenues for the first quarter were $7.4 million, an increase 7.5%, over
the prior-years first quarter. The growth in core subscriber revenues more than offset a decline
in AIS revenue versus the year ago period. Product Sales decreased in the first quarter of 2011 to
$486,000 from $535,000 in the first quarter of 2010.
Billable Subscriber Communicators
As of March 31, 2011, there were almost 589,000 billable subscriber communicators, compared to over
525,000 billable subscriber communicators as of March 31, 2010, an increase of 12.1%.
Costs and Expenses
Costs and Expenses in the first quarter of 2011 were $8.6 million, representing a 10.5% increase
compared to the same period in the prior year and includes Acquisition-related costs of $0.3
million for the pending acquisition of the StarTrak business. The higher costs are largely
associated with Acquisition-related costs of $257,000 and severance costs of $137,000 in the first
quarter of 2011 and reversal of bad debt reserve of $220,000 in the first quarter of 2010.
Excluding the impact of these items, Costs and Expenses increased 2.6%.
Net Loss
Net Loss attributable to ORBCOMM remained flat at $731,000 for the first quarter of 2011 compared
to a Net Loss attributable to ORBCOMM of $735,000 for the first quarter of 2010. The growth in
Total Revenues was offset by higher Costs and Expenses during the quarter.
ORBCOMMs Net Loss per Common Share was $0.02 for the three months ended March 31, 2011 compared to
Net Loss per Common Share of $0.02 for the prior year quarter.
EBITDA and Adjusted EBITDA
EBITDA for the first quarter of 2011 totaled $531,000, compared to EBITDA of $673,000 in the first
quarter of 2010.
Adjusted EBITDA for the first quarter of 2011 totaled $799,000, compared to Adjusted EBITDA of $1.3
million in the first quarter of 2010.
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the Company. Please see the
financial tables at the end of the release for a reconciliation of EBITDA and Adjusted EBITDA.
Balance Sheet
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities as of March 31, 2011 was $85.5
million, decreasing $3.5 million from $89.0 million at December 31, 2010. The decline is
attributable to $2.1 million for next generation satellite related capital expenditures and cash
used from operations of $0.6 million, due to shifts in working capital during the quarter.
3
Investment Community Conference Call
ORBCOMM will host a conference call and webcast for the investment community this morning at 10:30
AM ET. Senior management will review the results, discuss ORBCOMMs business, and address
questions.
Domestic participants should dial 888-549-7750 at least ten minutes prior to the start of the call.
International callers should dial 480-629-9819. The conference call identification number is
4436209. To hear a live web simulcast or to listen to the archived webcast following completion of
the call, please visit the Companys web site at www.orbcomm.com, click on investor relations tab,
then select Presentations and Webcasts, to access the link to the call. To listen to a telephone
replay of the conference call, please dial 800-406-7325 domestically or 303-590-3030
internationally and enter reservation identification number 4436209. The replay will be available
from approximately 12:00 PM ET on Tuesday, May 10, 2011, through 11:59 PM ET on Tuesday, May 17,
2011.
About ORBCOMM Inc.
ORBCOMM is a leading global satellite data communications company, focused on Machine-to-Machine
(M2M) communications. Its customers include Caterpillar Inc., Doosan Infracore America, Hitachi
Construction Machinery, Hyundai Heavy Industries, Asset Intelligence a division of I.D. Systems,
Inc., Komatsu Ltd., Manitowoc Crane Companies, Inc., and Volvo Construction Equipment among other
industry leaders. By means of a global network of low-earth orbit (LEO) satellites and
accompanying ground infrastructure, ORBCOMMs low-cost and reliable two-way data communication
services track, monitor and control mobile and fixed assets in four core markets: commercial
transportation; heavy equipment; industrial fixed assets; and marine/homeland security. ORBCOMM
based products are installed on trucks, containers, marine vessels, locomotives, backhoes,
pipelines, oil wells, utility meters, storage tanks and other assets. ORBCOMM is headquartered in
Fort Lee, New Jersey and has its network control center in Dulles, Virginia. For more
information, visit www.orbcomm.com.
4
Forward-Looking Statements
Certain statements discussed in this press release constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements
generally relate to our plans, objectives and expectations for future events and include statements
about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements
that are not historical facts. Such forward-looking statements, including those concerning the
Companys expectations, are subject to known and unknown risks and uncertainties, which could cause
actual results to differ materially from the results, projected, expected or implied by the
forward-looking statements, some of which are beyond the Companys control, that may cause the
Companys actual results, performance or achievements, or industry results, to be materially
different from any future results, performance or achievements expressed or implied by such
forward-looking statements. These risks and uncertainties include but are not limited to: the
impact of global recession and continued worldwide credit and capital constraints; substantial
losses we have incurred and expect to continue to incur; demand for and market acceptance of our products and
services and the applications developed by our resellers; loss or decline or slowdown in the growth
in business from Asset Intelligence, a subsidiary of I.D. Systems, Inc. (AI) (formerly a division
of General Electric Company (GE or General Electric)), other value-added resellers or VARs and
international value-added resellers or IVARs; loss or decline or slowdown in growth in business of
any of the specific industry sectors the Company serves, such as transportation, heavy equipment,
fixed assets and maritime; our proposed acquisition of the StarTrak Systems, LLC (StarTrak)
business may expose us to additional risks; litigation proceedings; technological changes, pricing
pressures and other competitive factors; the inability of our international resellers to develop
markets outside the United States; market acceptance and success of our Automatic Identification
System (AIS) business; the ability to restore commercial-level AIS service in the near term;
satellite launch and construction delays and cost overruns of our next-generation satellites;
in-orbit satellite failures or reduced performance of our existing satellites; the failure of our
system or reductions in levels of service due to technological malfunctions or deficiencies or
other events; our inability to renew or expand our satellite constellation; political, legal
regulatory, government administrative and economic conditions and developments in the United States
and other countries and territories in which we operate; and changes in our business strategy; and
the other risks described in our filings with the Securities and Exchange Commission. Unless
required by law, we undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. For more detail on these and
other risks, please see our Risk Factors section in our annual report on Form 10-K for the year
ended December 31, 2010.
Contacts
Investor Inquiries:
|
Media Inquiries: | |
Lucas Binder
|
Jennifer Lattif | |
VP, Business Development and Investor Relations
|
Senior Account Executive | |
ORBCOMM Inc.
|
The Abernathy MacGregor Group | |
703-433-6505
|
212-371-5999 | |
binder.lucas@orbcomm.com
|
jcl@abmac.com |
5
ORBCOMM Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 21,226 | $ | 17,026 | ||||
Restricted cash |
1,000 | 1,000 | ||||||
Marketable securities |
61,055 | 67,902 | ||||||
Accounts receivable, net of allowances for doubtful accounts of $630 and $557 |
5,660 | 4,536 | ||||||
Inventories |
207 | 172 | ||||||
Prepaid expenses and other current assets |
1,709 | 1,377 | ||||||
Deferred income taxes |
117 | 117 | ||||||
Total current assets |
90,974 | 92,130 | ||||||
Satellite network and other equipment, net |
72,338 | 71,684 | ||||||
Intangible assets, net |
743 | 1,114 | ||||||
Restricted cash |
2,220 | 3,030 | ||||||
Other investment |
2,334 | 2,278 | ||||||
Deferred income taxes |
140 | 141 | ||||||
Other assets |
1,058 | 1,092 | ||||||
Total assets |
$ | 169,857 | $ | 171,469 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 2,508 | $ | 2,143 | ||||
Accrued liabilities |
4,758 | 6,043 | ||||||
Current portion of deferred revenue |
1,946 | 2,134 | ||||||
Total current liabilities |
9,212 | 10,320 | ||||||
Note payable-related party |
1,540 | 1,416 | ||||||
Deferred revenue, net of current portion |
1,194 | 1,239 | ||||||
Other liabilities |
317 | 375 | ||||||
Total liabilities |
12,263 | 13,350 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
ORBCOMM Inc. stockholders equity |
||||||||
Common
stock, par value $0.001; 250,000,000 shares authorized; 42,760,355 and
42,616,950 shares issued and outstanding |
43 | 43 | ||||||
Additional paid-in capital |
234,527 | 234,125 | ||||||
Accumulated other comprehensive income |
1,075 | 1,126 | ||||||
Accumulated deficit |
(77,315 | ) | (76,584 | ) | ||||
Total ORBCOMM Inc. stockholders equity |
158,330 | 158,710 | ||||||
Noncontrolling interests |
(736 | ) | (591 | ) | ||||
Total equity |
157,594 | 158,119 | ||||||
Total liabilities and equity |
$ | 169,857 | $ | 171,469 | ||||
6
ORBCOMM Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Service revenues |
$ | 7,397 | $ | 6,882 | ||||
Product sales |
486 | 535 | ||||||
Total revenues |
7,883 | 7,417 | ||||||
Costs and expenses (1): |
||||||||
Costs of services |
3,463 | 3,136 | ||||||
Costs of product sales |
290 | 323 | ||||||
Selling, general and administrative |
4,421 | 4,162 | ||||||
Product development |
174 | 164 | ||||||
Acquisition-related costs |
257 | | ||||||
Total costs and expenses |
8,605 | 7,785 | ||||||
Loss from operations |
(722 | ) | (368 | ) | ||||
Other income (expense): |
||||||||
Interest income |
54 | 37 | ||||||
Other income (expense) |
101 | (120 | ) | |||||
Interest expense |
(48 | ) | (48 | ) | ||||
Total other income (expense) |
107 | (131 | ) | |||||
Loss from continuing operations before income taxes |
(615 | ) | (499 | ) | ||||
Income taxes |
111 | | ||||||
Loss from continuing operations |
(726 | ) | (499 | ) | ||||
Loss from
discontinued operations |
| (91 | ) | |||||
Net Loss |
(726 | ) | (590 | ) | ||||
Less: Net income attributable to the noncontrolling interests |
5 | 145 | ||||||
Net loss attributable to ORBCOMM Inc. |
$ | (731 | ) | $ | (735 | ) | ||
Net loss attributable to ORBCOMM Inc.: |
||||||||
Loss from continuing operations |
$ | (731 | ) | $ | (644 | ) | ||
Loss from discontinued operations |
| (91 | ) | |||||
Net loss attributable to ORBCOMM Inc. |
$ | (731 | ) | $ | (735 | ) | ||
Per share information-basic and diluted: |
||||||||
Loss from continuing operations |
$ | (0.02 | ) | $ | (0.02 | ) | ||
Loss from discontinued operations |
| (0.00 | ) | |||||
Net loss attributable to ORBCOMM Inc. |
$ | (0.02 | ) | $ | (0.02 | ) | ||
Weighted average common shares outstanding: |
||||||||
Basic and diluted |
42,726 | 42,559 | ||||||
(1) Stock-based compensation included in costs and expenses: |
||||||||
Costs of services |
$ | 35 | $ | 14 | ||||
Selling, general and administrative |
225 | 416 | ||||||
Product development |
3 | 2 | ||||||
$ | 263 | $ | 432 | |||||
7
ORBCOMM
Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (726 | ) | $ | (590 | ) | ||
Adjustments to reconcile net loss to net cash
used in operating activities: |
||||||||
Change in allowance for doubtful accounts |
73 | (201 | ) | |||||
Depreciation and amortization |
1,157 | 1,397 | ||||||
Accretion on note payable-related party |
33 | 33 | ||||||
Stock-based compensation |
263 | 432 | ||||||
Foreign exchange (gains) losses |
(42 | ) | 121 | |||||
Amortization of premium on marketable securities |
450 | 131 | ||||||
Dividend received in common stock for other investment |
(56 | ) | | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(1,195 | ) | (813 | ) | ||||
Inventories |
(38 | ) | (6 | ) | ||||
Prepaid expenses and other assets |
(25 | ) | (44 | ) | ||||
Accounts payable and accrued liabilities |
(209 | ) | (528 | ) | ||||
Deferred revenue |
(230 | ) | (262 | ) | ||||
Other liabilities |
(30 | ) | | |||||
Net cash used in operating activities of continuing operations |
(575 | ) | (330 | ) | ||||
Net cash used in operating activities of discontinued operations |
| (177 | ) | |||||
Net cash used in operating activities |
(575 | ) | (507 | ) | ||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(2,121 | ) | (984 | ) | ||||
Purchases of marketable securities |
(23,848 | ) | (66,422 | ) | ||||
Proceeds from maturities of marketable securities |
30,245 | 26,070 | ||||||
Issuance of note receivable to Alanco |
(300 | ) | | |||||
Change in restricted cash |
810 | | ||||||
Net cash provided by (used in) investing activities of continuing operations |
4,786 | (41,336 | ) | |||||
Net cash used in investing activities of discontinued operations |
| | ||||||
Net cash provided by (used in) investing activities |
4,786 | (41,336 | ) | |||||
Cash
flows from financing activities |
| | ||||||
Effect of
exchange rate changes on cash and cash equivalents |
(11 | ) | (13 | ) | ||||
Net
increase (decrease) in cash and cash equivalents |
4,200 | (41,856 | ) | |||||
Cash and
cash equivalents: |
||||||||
Beginning of period |
17,026 | 65,292 | ||||||
End of period |
$ | 21,226 | $ | 23,436 | ||||
8
The following table reconciles our Net Income (Loss) to EBITDA and Adjusted EBITDA for the periods
shown:
Three months ended | ||||||||
March 31, | ||||||||
(in thousands) | 2011 | 2010 | ||||||
Net Income (Loss) attributable to ORBCOMM |
$ | (731 | ) | $ | (735 | ) | ||
Net interest (income) expense |
(6 | ) | 11 | |||||
Provision for income taxes |
111 | | ||||||
Depreciation and amortization |
1,157 | 1,397 | ||||||
EBITDA |
531 | 673 | ||||||
Stock-based compensation |
263 | 432 | ||||||
Noncontrolling interests |
5 | 145 | ||||||
Adjusted EBITDA |
$ | 799 | $ | 1,250 | ||||
EBITDA is defined as earnings before interest income (expense), provision for income taxes and
depreciation and amortization. ORBCOMM believes EBITDA is useful to its management and investors in
evaluating operating performance because it is one of the primary measures used to evaluate the
economic productivity of the Companys operations, including its ability to obtain and maintain its
customers, its ability to operate its business effectively, the efficiency of its employees and the
profitability associated with their performance. It also helps ORBCOMMs management and investors
to meaningfully evaluate and compare the results of the Companys operations from period to period
on a consistent basis by removing the impact of its financing transactions and the depreciation and
amortization impact of capital investments from its operating results. In addition, ORBCOMM
management uses EBITDA in presentations to its board of directors to enable it to have the same
measurement of operating performance used by management and for planning purposes, including the
preparation of the annual operating budget. The Company also believes that EBITDA, adjusted for
stock-based compensation expense and noncontrolling interests (Adjusted EBITDA), is useful to
investors to evaluate the Companys core operating results and financial performance and its
capacity to fund capital expenditures, because it excludes items that are significant non-cash
expenses reflected in the Condensed Consolidated Statements of Operations. EBITDA and Adjusted
EBITDA are not performance measures calculated in accordance with accounting principles generally
accepted in the United States, or GAAP. While ORBCOMM considers EBITDA and Adjusted EBITDA to be
important measures of operating performance, they should be considered in addition to, and not as a
substitute for, or superior to, Net Loss or other measures of financial performance prepared in
accordance with GAAP and may be different than EBITDA and Adjusted EBITDA measures presented by
other companies. A reconciliation table is presented above.
9