MCLEAN, Va., April 23, 2019 /PRNewswire/ -- Iridium
Communications Inc. (Nasdaq: IRDM) ("Iridium") today reported
financial results for the first quarter of 2019 and affirmed its
full-year 2019 outlook. Net loss was $18.0 million, or $0.18 per diluted share, for the first quarter of
2019, as compared to net income of $11.5
million, or $0.07 per diluted
share, for the first quarter of 2018. This decrease in net
income was primarily the result of a $34.5
million increase in depreciation and amortization expense
compared to the year-ago period. Operational EBITDA
("OEBITDA")(1) for the first quarter was $78.0 million, as compared to $68.5 million for the prior-year period,
representing a year-over-year increase of 14.0% and an OEBITDA
margin(1) of 58%. OEBITDA primarily benefitted
from the recognition of revenue from hosted payload and other data
services, telephony pricing actions and growth in the Company's IoT
data business.
Iridium reported first-quarter total revenue of $133.7 million, which consisted of $107.0 million of service revenue and
$26.7 million of revenue related to
equipment sales and engineering and support projects. Total
revenue increased 12% from the comparable period of 2018, while
service revenue grew 19% from the year-ago period. Service
revenue, which represents primarily recurring revenue from
Iridium's growing subscriber base, was 80% of total revenue for the
first quarter of 2019.
The Company ended the quarter with 1,151,000 total billable
subscribers, which compares to 996,000 for the year-ago period and
is up from 1,121,000 for the quarter ended December 31, 2018. Total billable
subscribers grew 16% year-over-year, driven by growth in commercial
and government IoT customers.
"Iridium enjoyed solid revenue and subscriber growth to start
2019, driven predominantly by strength in commercial
services. New contributions from hosted payloads and
continued momentum in commercial IoT are expected to be a tailwind
to our business and support OEBITDA growth for the remainder of the
year," said Matt Desch, CEO,
Iridium.
The Company's negotiations continue with the Department of
Defense ("DoD") to renew its Enhanced Mobile Satellite Services
("EMSS") contract with the U.S. government. On April 19, 2019, the Company entered into a
short-term contract extension with the DoD to provide additional
time to finalize the terms of a new EMSS contract. Under the
terms of this extension, the DoD will pay Iridium $8.3 million for a one-month period, during which
the Company expects to conclude an agreement. Iridium
continues to expect a five-year contract with annual revenue
greater than the final year of the current EMSS contract.
As announced yesterday, Iridium was awarded a $54 million contract for Gateway Maintenance and
Support Services ("GMSS") by the DoD. The multi-year contract
provides ongoing technical and maintenance support for the
dedicated U.S. government ground infrastructure that connect to the
Iridium network.
Commenting on Iridium Certus® and Aireon LLC, Desch
said, "Iridium Certus is positioned to be a best-in-class solution
for L-band broadband users around the world. Demand for our
new broadband service has continued to ramp since its formal launch
in January, and activations are meeting our expectations."
Desch added, "Our Aireon joint venture also launched its live air
traffic surveillance and tracking service earlier this month.
For the first time in history, aircraft can be surveilled anywhere
on the planet. Aireon's real-time air traffic information
will extend the reach of traditional terrestrial-based systems and
radically optimize flight safety and efficiency. We are proud
of this accomplishment and delighted to maintain a meaningful
equity interest in this transformative company."
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's
business, representing 64% of the Company's total revenue during
the first quarter. The Company's commercial customer base is
diverse and includes markets such as maritime, aviation, oil and
gas, mining, recreation, forestry, construction, transportation and
emergency services. These customers rely on Iridium's
products and services as critical to their daily operations and
integral to their communications and business
infrastructure.
- Commercial service revenue was $85.0
million, up 25% from last year's comparable period due to
revenue from hosted payload and other data services, telephony
pricing action and increased IoT revenues.
- Commercial voice and data subscribers rose 1% from the year-ago
period to 358,000 customers. Commercial voice and data
average revenue per user ("ARPU") was $45 during the first quarter, compared to
$41 in last year's comparable period,
as a result of the rollout of new pricing plans in 2018.
Commercial IoT data subscribers grew 26% from the year-ago
period to 678,000 customers, driven by continued strength in
consumer personal communications and tracking devices.
Commercial IoT data ARPU was down 10% to $11.32 in the first quarter.
- Iridium's commercial business ended the quarter with 1,036,000
billable subscribers, which compares to 892,000 for the year-ago
period and is up from 1,008,000 for the quarter ended December 31, 2018. IoT data subscribers
represented 65% of billable commercial subscribers at the end of
the quarter, an increase from 60% at the end of the prior-year
period.
- Hosted payload and other data service revenue increased
$9.6 million, or 228%, from the
prior-year period primarily due to increased hosting and data
services.
Service – Government
Iridium's voice and data solutions improve situational awareness
for military personnel and track critical assets in tough
environments around the globe, providing a unique value proposition
that is not easily duplicated.
- Government service revenue was $22.0
million, consistent with the prior-year period, under the
Company's fixed fee EMSS contract with the U.S. government.
- Iridium's government business ended the quarter with 115,000
subscribers, which compares to 104,000 for the year-ago period and
is up from 113,000 for the quarter ended December 31, 2018. Government voice and
data subscribers remained unchanged from the year-ago period at
53,000 as of March 31, 2019.
IoT data subscribers increased 22% year-over-year and represented
54% of government subscribers, an increase from 49% at the end of
the prior-year period.
Equipment
- Equipment revenue was $21.0
million during the first quarter, down 19% from the
prior-year period.
- The Company continues to forecast lower equipment sales in
2019.
Engineering & Support
- Engineering and support revenue was $5.7
million during the first quarter, compared to $3.6 million in the prior year's quarter,
primarily due to the episodic nature of government-sponsored
projects.
Capital expenditures were $34.6
million for the first quarter and primarily related to
spending for the Company's recently completed, next-generation
satellite program. The Company ended the first quarter with
credit facility gross debt of $1.7
billion and a cash and cash equivalents balance of
$275.7 million. Net debt was
$1.6 billion, calculated as
$1.7 billion of credit facility gross
debt and $360.0 million of unsecured
notes, less $275.7 million of cash
and cash equivalents, as well as $193.0
million in restricted cash.
2019 Outlook
The Company affirmed its full-year 2019 outlook for total
service revenue growth, OEBITDA, cash taxes, and net
leverage. The Company continues to expect:
- Total service revenue of approximately $440 million for the full-year 2019.
- OEBITDA of between $325 and
$335 million in 2019. OEBITDA for
2018 was $302.0 million.
- Negligible cash taxes in 2019. Cash taxes are expected to be
negligible through approximately 2023.
- Net leverage of approximately 4.5x OEBITDA at the end of
2019.
Non-GAAP Financial Measures & Definitions
In addition to disclosing financial results that are determined
in accordance with U.S. GAAP, the Company provides Operational
EBITDA and Operational EBITDA margin, which are non-GAAP financial
measures, as supplemental measures to help investors evaluate the
Company's fundamental operational performance. Operational
EBITDA represents earnings before interest, income taxes,
depreciation and amortization, loss from investment in Aireon, and
share-based compensation expenses. U.S. GAAP requires that
certain of the expenses associated with the approximately
$3 billion construction cost of
Iridium NEXT (the "Construction Costs") be expensed. These
certain Construction Costs, which beginning in 2018 principally
consisted of in-orbit insurance, will continue to be excluded from
the calculation of Operational EBITDA through the first quarter of
2020. The Company also presents Operational EBITDA expressed
as a percentage of GAAP revenue, or Operational EBITDA
margin. Operational EBITDA, along with its related measure,
Operational EBITDA margin, does not represent, and should not be
considered, an alternative to U.S. GAAP measurements such as net
income or loss, and the Company's calculations thereof may not be
comparable to similarly titled measures reported by other
companies. By eliminating interest, income taxes,
depreciation and amortization, loss from investment in Aireon, and
share-based compensation expenses, the Company believes the result
is a useful measure across time in evaluating its fundamental core
operating performance. Management also uses Operational
EBITDA to manage the business, including in preparing its annual
operating budget, debt covenant compliance, financial projections
and compensation plans. The Company believes that Operational
EBITDA is also useful to investors because similar measures are
frequently used by securities analysts, investors and other
interested parties in their evaluation of companies in similar
industries. However, there is no standardized measurement of
Operational EBITDA, and Operational EBITDA as the Company presents
it may not be comparable with similarly titled non-GAAP financial
measures used by other companies. As indicated, Operational
EBITDA does not include interest expense on borrowed money, the
payment of income taxes, amortization of the Company's
definite-lived intangible assets, or depreciation expense on the
Company's capital assets, which are necessary elements of the
Company's operations. It also excludes the loss from
investment in Aireon. Since Operational EBITDA does not
account for these and other expenses, its utility as a measure of
the Company's operating performance has material limitations.
Due to these limitations, the Company's management does not view
Operational EBITDA in isolation, but also uses other measurements,
such as net income, revenues and operating profit, to measure
operating performance. Please refer to the schedule below for
a reconciliation of consolidated GAAP net income to Operational
EBITDA and Iridium's Investor Relations webpage at
www.iridium.com for a discussion and reconciliation of this
and other non-GAAP financial measures. We do not provide a
forward-looking reconciliation of expected full-year 2019
Operational EBITDA guidance as the amount and significance of
special items required to develop meaningful comparable GAAP
financial measures cannot be estimated at this time without
unreasonable efforts.
|
Iridium
Communications Inc.
|
|
Supplemental
Reconciliation of GAAP Net Income (Loss) to Operational
EBITDA
|
|
(In
thousands)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
GAAP net income
(loss)
|
$
(18,024)
|
|
$
11,472
|
Interest expense,
net
|
25,804
|
|
4,165
|
Income tax benefit
(expense)
|
(9,739)
|
|
3,839
|
Depreciation and
amortization
|
72,914
|
|
38,465
|
Iridium NEXT
expenses, net
|
3,772
|
|
6,576
|
Share-based
compensation
|
3,303
|
|
3,958
|
Operational
EBITDA
|
$
78,030
|
|
$
68,475
|
Conference Call Information
As previously announced, the Company will host a conference call
to discuss its results at 8:30 a.m. Eastern
Time on Tuesday, April 23, 2019. Callers should dial
1-412-902-6740 to access the call. The conference call will
also be simultaneously webcast on Iridium's Investor Relations
webpage at www.iridium.com. An archive of the webcast will be
available following the live conference call.
About Iridium Communications Inc.
Iridium® is the only mobile voice and data satellite
communications network that spans the entire globe. Iridium
enables connections between people, organizations and assets to and
from anywhere, in real time. Together with its ecosystem of
partner companies, Iridium delivers an innovative and rich
portfolio of reliable solutions for markets that require truly
global communications. The company has recently completed its
next-generation satellite network and launched its new specialty
broadband service, Iridium Certus. Iridium Communications
Inc. is headquartered in McLean,
Va., U.S.A., and its common stock trades on the Nasdaq
Global Select Market under the ticker symbol IRDM. For more
information about Iridium products, services and partner solutions,
visit www.iridium.com.
Forward-Looking Statements
Statements in this press release that are not purely
historical facts may constitute forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding Iridium's
expectations with respect to total service revenue growth, OEBITDA,
cash taxes, and leverage for 2019; cash taxes over the
longer-term; anticipated equipment revenue, and prospects
for a new EMSS contract with the U.S. government.
Forward-looking statements can be identified by the words
"anticipates," "may," "can," "believes," "expects," "projects,"
"intends," "likely," "will," "to be" and other expressions that are
predictions or indicate future events, trends or prospects. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Iridium to differ materially 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, uncertainties
regarding customer demand for Iridium's products and services,
including demand from the U.S. government; Iridium's ability to
maintain the health, capacity and content of its satellite
constellation, and the development of and market for Iridium's
products and services, as well as general industry and economic
conditions, and competitive, legal, governmental and technological
factors. Other factors that could cause actual results to differ
materially from those indicated by the forward-looking statements
include those factors listed under the caption "Risk Factors" in
the Company's Form 10-K for the year ended December 31, 2018, filed with the Securities and
Exchange Commission ("SEC") on February 28,
2019, as well as other filings Iridium makes with the SEC
from time to time. There is no assurance that Iridium's
expectations will be realized. If one or more of these risks or
uncertainties materialize, or if Iridium's underlying assumptions
prove incorrect, actual results may vary materially from those
expected, estimated or projected. Iridium's forward-looking
statements are based on information available to it as of the date
of this press release and speak only as of the date of this press
release, and Iridium undertakes no obligation to update
forward-looking statements.
Investor
Contact:
|
Press
Contact:
|
Kenneth
Levy
|
Jordan
Hassin
|
Iridium
Communications Inc.
|
Iridium
Communications Inc.
|
+1 (703)
287-7570
|
+1 (703)
287-7421
|
ken.levy@iridium.com
|
jordan.hassin@iridium.com
|
Iridium
Communications Inc.
|
|
|
|
Condensed
Consolidated Statements of Operations
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
Service
revenue
|
|
|
|
Commercial
|
$
84,951
|
|
$
67,742
|
Government
|
22,000
|
|
22,000
|
Total service
revenue
|
106,951
|
|
89,742
|
Subscriber
equipment
|
21,008
|
|
25,782
|
Engineering and
support service
|
5,726
|
|
3,624
|
Total
revenue
|
133,685
|
|
119,148
|
|
|
|
|
Operating
expenses:
|
|
|
|
Cost of services
(exclusive of depreciation and amortization)
|
22,521
|
|
18,952
|
Cost of subscriber
equipment sales
|
12,431
|
|
15,214
|
Research and
development
|
3,611
|
|
4,583
|
Selling, general and
administrative
|
23,841
|
|
22,495
|
Depreciation and
amortization
|
72,914
|
|
38,465
|
Total operating
expenses
|
135,318
|
|
99,709
|
Operating income
(loss)
|
(1,633)
|
|
19,439
|
|
|
|
|
Other expense,
net:
|
|
|
|
Interest expense,
net
|
(25,804)
|
|
(4,165)
|
Other income
(expense), net
|
(326)
|
|
37
|
Total other expense,
net
|
(26,130)
|
|
(4,128)
|
|
|
|
|
Income (loss) before
income taxes
|
(27,763)
|
|
15,311
|
Income tax benefit
(expense)
|
9,739
|
|
(3,839)
|
Net income
(loss)
|
(18,024)
|
|
11,472
|
Series A preferred
stock dividends, declared and paid excluding cumulative
dividends
|
-
|
|
1,750
|
Series B preferred
stock dividends, declared and paid excluding cumulative
dividends
|
-
|
|
2,109
|
Series B preferred
stock dividends, undeclared
|
2,097
|
|
-
|
Net income (loss)
attributable to common stockholders
|
$
(20,121)
|
|
$
7,613
|
|
|
|
|
Operational
EBITDA
|
$
78,030
|
|
$
68,475
|
Iridium
Communications Inc.
|
|
|
|
|
|
Summary Revenue and
OEBITDA Highlights
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
% Change
|
Revenue
|
|
|
|
|
|
Service
revenue(1)
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Voice and data and
IoT data service
|
|
|
|
|
|
Voice and
data
|
$
48,595
|
|
$
43,730
|
|
11%
|
IoT
data(2)
|
22,491
|
|
19,783
|
|
14%
|
Hosted payload and
other data service (3)
|
13,865
|
|
4,229
|
|
228%
|
Total commercial data
service
|
84,951
|
|
67,742
|
|
25%
|
|
|
|
|
|
|
Government service
revenue(4)
|
22,000
|
|
22,000
|
|
0%
|
|
|
|
|
|
|
Total service
revenue
|
106,951
|
|
89,742
|
|
19%
|
|
|
|
|
|
|
Subscriber
equipment
|
21,008
|
|
25,782
|
|
-19%
|
|
|
|
|
|
|
Engineering and
support(5)
|
|
|
|
|
|
Commercial
|
225
|
|
81
|
|
178%
|
Government
|
5,501
|
|
3,543
|
|
55%
|
Total engineering and
support
|
5,726
|
|
3,624
|
|
58%
|
|
|
|
|
|
|
Total
revenue
|
$
133,685
|
|
$
119,148
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
EBITDA
|
|
|
|
|
|
Operational
EBITDA
|
$
78,030
|
|
$
68,475
|
|
14%
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Capital expenditures
(6)
|
$
34,643
|
|
$
82,961
|
|
|
|
|
|
|
|
|
Net debt
(7)
|
$
1,576,184
|
|
$
1,520,086
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, and marketable securities
|
$
275,659
|
|
$
450,732
|
|
|
|
|
|
|
|
|
Credit
facility
|
$
1,684,869
|
|
$
1,800,000
|
|
|
Deferred financing
costs
|
(74,284)
|
|
(100,451)
|
|
|
Credit facility,
net
|
$
1,610,585
|
|
$
1,699,549
|
|
|
|
(1) Service revenue
consists of primarily subscription-based services which often
generate a long-term recurring revenue stream from
subscribers.
|
|
(2) IoT data service
provides a two-way short burst data transmission between Iridium
Communications Inc.'s network and a telemetry unit, which may be
located, for example, on a container in transit or a buoy
monitoring oceanographic conditions.
|
|
(3) Hosted payload
and other services consist primarily of services that do not have
traditional billable subscribers. Hosted payload services consist
of hosting and data services to our payload customers, Aireon and
Harris. Other services include primarily Iridium Communications
Inc.'s one-way satellite timing, location, and authentication
services (STL) which provides position, navigation and timing
technology.
|
|
(4) Government
service revenue consists of voice and IoT data subscription-based
services provided to agencies of the U.S. government through prime
contracts or subcontracts.
|
|
(5) Engineering and
support includes maintenance services to the U.S. government's
dedicated gateway in Hawaii and engineering services to assist
customers in developing new technologies for use on Iridium
Communications Inc.'s satellite system.
|
|
(6) Capital
expenditures based on cash spent in the respective
period.
|
|
(7) Net debt is
calculated by taking the sum of the gross credit facility and gross
high yield notes, less cash and cash equivalents, marketable
securities, and the debt service reserve for the credit
facility.
|
Iridium
Communications Inc.
|
|
|
|
|
|
Subscriber
Highlights
|
|
|
|
|
|
(In thousands, except
ARPU)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March
31,
|
|
|
|
2019
|
|
2018
|
|
% Change
|
Billable
Subscribers (1) (2)
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Voice and data and
IoT data service
|
|
|
|
|
|
Voice and
data
|
358
|
|
354
|
|
1%
|
IoT data
|
678
|
|
538
|
|
26%
|
Total commercial
voice and data and IoT data service
|
1,036
|
|
892
|
|
16%
|
|
|
|
|
|
|
Government
|
|
|
|
|
|
Voice and data and
IoT data service
|
|
|
|
|
|
Voice and
data
|
53
|
|
53
|
|
0%
|
IoT data
|
62
|
|
51
|
|
22%
|
Total government
voice and data and IoT data service
|
115
|
|
104
|
|
11%
|
Total billable
subscribers
|
1,151
|
|
996
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
% Change
|
Net Billable
Subscriber Additions From Prior Quarter
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Voice and data and
IoT data service
|
|
|
|
|
|
Voice and
data
|
(3)
|
|
(5)
|
|
40%
|
IoT data
|
31
|
|
28
|
|
11%
|
Total commercial
voice and data and IoT data service
|
28
|
|
23
|
|
22%
|
|
|
|
|
|
|
Government
|
|
|
|
|
|
Voice and data and
IoT data service
|
|
|
|
|
|
Voice and
data
|
(1)
|
|
1
|
|
-200%
|
IoT data
|
3
|
|
3
|
|
0%
|
Total government
voice and data and IoT data service
|
2
|
|
4
|
|
-50%
|
Total net billable
subscriber additions
|
30
|
|
27
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
% Change
|
ARPU
(2) (3)
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Voice and
data
|
45
|
|
41
|
|
10%
|
IoT data
|
11.32
|
|
12.59
|
|
-10%
|
|
(1) Subscribers as of
the end of the respective period.
|
|
(2) Billable
subscriber and ARPU data is not applicable for Hosted payload and
other data service revenue items and is excluded from presentation
above.
|
|
(3) Average monthly
revenue per unit, or ARPU, is calculated by dividing revenue in the
respective period by the average of the number of billable
subscribers at the beginning of the period and the number of
billable subscribers at the end of the period and then dividing the
result by the number of months in the period.
|
View original
content:http://www.prnewswire.com/news-releases/iridium-announces-first-quarter-2019-results-company-affirms-2019-outlook-300835703.html
SOURCE Iridium Communications Inc.