MCLEAN, Va., May 3, 2012 (GLOBE NEWSWIRE) -- Iridium Communications Inc. (Nasdaq:IRDM) ("Iridium") today reported financial results for the first quarter of 2012 and affirmed its outlook for the full-year 2012. Net income was $12.4 million, or $0.16 per diluted share, for the first quarter of 2012, as compared to $8.3 million, or $0.11 per diluted share, for the first quarter of 2011. Operational EBITDA ("OEBITDA")(1) for the first quarter was $43.9 million, as compared to $43.1 million for the prior-year period, representing year-over-year growth of 2 percent and an OEBITDA margin(1) of 47 percent. OEBITDA benefited from strong growth in commercial service revenue, but was negatively impacted by a $1.2 million charge related to a product warranty expense.
Iridium reported first-quarter total revenue of $93.5 million, which consisted of $66.8 million of service revenue and $26.6 million of equipment, engineering and support revenue. Total revenue grew 2 percent versus the comparable period of 2011, while service revenue increased 9 percent from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium's growing subscriber base, was 72 percent of total revenue for the first quarter of 2012 as compared to 67 percent in the year-ago period.
The Company ended the quarter with 544,000 total billable subscribers, which compares to 447,000 for the year-ago period and 523,000 for the quarter ended December 31, 2011. Total billable subscribers grew 22 percent year-over-year, driven by strength in commercial voice and machine-to-machine ("M2M") customers.
"Iridium is off to a solid start in 2012, with our core commercial business growing subscribers 24% and service revenue 13% year-over-year," said Matt Desch, CEO, Iridium. "We've also posted our sixth consecutive quarter of approximately 50% year-over-year M2M subscriber growth since we began specifically reporting on this business, and now draw nearly one-fifth of our commercial service revenue from this fast-growing market. In the maritime sector, we're building on a strategy to capture more market share with a value-oriented broadband offering. We've expanded our relationships with VSAT operators and are supporting our partners in a way that extends our reach and fosters innovation, rather than competing directly with them. Partner interest remains strong for our new Iridium PilotTM broadband platform, as we have visibility to our order book reaching 60% of our full-year 2012 target in the first quarter. Our Iridium OpenPort® service now represents 10% of our commercial service revenue and will remain a meaningful contributor to our results in the future."
Desch continued, "We're still seeing solid growth in Netted IridiumSM and M2M data services, but that's being offset by softness in our traditional U.S. Government voice business due to reduced spending and troop levels. The U.S. Department of Defense exercised the option for its fifth of five contract years through March 2013. We anticipate getting to work with them on a new multi-year contract later this year, and expect that the framework of our relationship will remain essentially the same. All in all, our network is healthy, our markets are attractive, and our recurring service revenue growth continues to support operating cash flow expansion."
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing 55 percent 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.
Service – Government
Iridium is regarded as a key partner in the U.S. Government communications infrastructure. 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. The Department of Defense continues to invest with Iridium in its products and dedicated gateway, further validating the lasting and long-term nature of the Company's relationship with this important customer.
Engineering & Support
Capital expenditures were $34.8 million for the first quarter and primarily related to spending for the Company's next-generation satellite constellation, Iridium NEXT, and upgraded ground network infrastructure at its commercial gateway. The Company ended the first quarter with a cash and cash equivalents balance of $146.9 million and gross debt of $441.1 million. Net debt was $253.5 million.
Iridium NEXT and Hosted Payloads Update
The Company affirmed its full-year 2012 outlook for total billable subscriber growth, service revenue and OEBITDA. The Company expects:
Non-GAAP Financial Measures & Definitions
(1) In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company discloses 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, Iridium NEXT revenue and expenses (for periods prior to the deployment of Iridium NEXT), share-based compensation expenses, and the impact of purchase accounting. The Company also presents Operational EBITDA expressed as a percentage of adjusted revenue, or Operational EBITDA margin. Adjusted revenue excludes the impact of purchase accounting and Iridium NEXT revenue. Operational EBITDA 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, Iridium NEXT revenue and expenses (for periods prior to the deployment of Iridium NEXT only), share-based compensation expenses, and the impact of purchase accounting, 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 or the payment of income taxes or depreciation expense on the Company's capital assets, which are necessary elements of the Company's operations. It also excludes expenses in connection with the development, deployment and financing of Iridium NEXT. 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 and 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 Operational EBITDA to consolidated GAAP net income and Iridium's Investor Relations webpage at www.iridium.com for a discussion and reconciliation of this and other non-GAAP financial measures.
Conference Call Information
As previously announced, the Company will host a conference call to discuss results at 8:30 a.m. ET on Thursday, May 3, 2012. Callers should dial (877) 334-1964 (U.S. only) or (631) 291-4574(from outside the U.S.) to access the call. The conference call will also be simultaneously webcast on Iridium's Investor Relations webpage at http://www.iridium.com. A replay of the conference call will be available beginning Thursday, May 3, 2012 through Thursday, May 10, 2012 at Iridium's Investor Relations webpage. Callers can also dial (855) 859-2056 (U.S. only) or (404) 537-3406, Access Code 61804365, for an audio replay of the 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 ever-expanding ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. The company has a major development program underway for its next-generation network – Iridium NEXT. 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. IRDM-F
The Iridium Communications Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10426
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 the development of Iridium NEXT; anticipated hosted payload arrangements; the development of the product portfolio and the size of the addressable market; anticipated growth in subscribers, data services and total service revenue; anticipated equipment revenue; anticipated growth in Operational EBITDA and OEBITDA margin and anticipated cash taxes. Other 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 increases in customer demand for Iridium's products and services, Iridium's ability to maintain the health, capacity and content of its satellite constellation, and the development of and transition to Iridium NEXT, including expanded capacity and features, and the development of and market for hosted payloads, 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 period ended December 31, 2011, filed with the Securities and Exchange Commission on March 6, 2012. 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 speak only as of the date of this press release, and Iridium undertakes no obligation to update forward-looking statements.
CONTACT: Investor Contact:
Iridium Communications Inc.
+1 (703) 287-7570
Iridium Communications Inc.
+1 (703) 287-7476