Exhibit 99
----------
ORBCOMM REPORTS RECORD REVENUES
AND NARROWS NET LOSS IN SECOND QUARTER 2007
o Service Revenue Increases 61% and Net Loss Improves 42% Over Prior
Year Quarter
o Komatsu To Standardize ORBCOMM On Most Tier-3 Construction Models
Fort Lee, NJ, August 14, 2007 - ORBCOMM Inc. (Nasdaq: ORBC), a global satellite
data communications company focused on two-way Machine-to-Machine (M2M)
communications, today announced financial results for the second quarter and six
months ended June 30, 2007.
For the three months ended June 30, 2007, Service Revenue increased 60.7% to
$4.2 million, or $1.6 million higher than the comparable period of 2006. Product
Revenues decreased 33.7% to $2.4 million from $3.6 million for the three months
ended June 30, 2006 due to a large order in the second quarter of 2006 related
to General Electric's installation of subscriber communicators on WalMart
trailers. Product Revenue increased 19.8%, or $0.4 million, over the first
quarter of 2007. Total Revenue in the second quarter increased 5.8% over the
prior year quarter.
The company's reported net loss narrowed in the quarter to $1.3 million, a 42.4%
improvement compared to a net loss of $2.3 million in the second quarter of
2006. For the first six months of 2007, net loss improved 21.4% to $4.2 million
from a net loss of $5.4 million for the comparable period in 2006.
"We improved our financial performance in the second quarter, narrowing our net
loss, despite some market softness in a few end markets," said Jerome Eisenberg,
ORBCOMM's Chief Executive Officer. "We are well-positioned to continue our
growth, and believe that some market softness is related to timing of
investments by end users, and not a loss of market share. We expect to make an
announcement about the development of the next generation satellites shortly."
"We're seeing mixed results in some of the markets our VARs serve," added Marc
Eisenberg, ORBCOMM's Chief Operating Officer. "The transportation market sector
is slower than anticipated as end users take a more cautious approach to new
investment spending, but we are still adding a significant number of units in
this market. New applications such as rail car monitoring will start to come
online in the third quarter. Furthermore, in the heavy equipment market, we are
encouraged that our OEMs are standardizing ORBCOMM's communication services on
their equipment. Komatsu, the world's second largest heavy equipment OEM, is
making ORBCOMM's service standard on Tier-3 construction machines and will
continue to add ORBCOMM's services with new model changes. When an OEM
standardizes our service rather than treating it as an aftermarket product, we
see a large multiple increase in deployments, and we continue to diligently work
to expand OEM standardizations. Combined with previous announcements from Volvo
Trucks and Hitachi Construction Equipment, this solidifies our position as the
undisputed leader in the OEM commercial telematics market."
"We narrowed our net loss and improved on our operating loss over the prior year
period despite higher stock-based compensation cost," added Robert Costantini,
ORBCOMM's Chief Financial Officer. "Adjusted EBITDA (EBITDA less stock-based
compensation) showed a significant improvement to a loss of just over $0.9
million for the quarter as a result of the leverage in our operating model.
Expenses related to service operations grew 14.2% in contrast to the growth in
Service Revenues of 60.7%. Expenses decreased 1.8% in the second quarter of 2007
over the second quarter of 2006, when adjusting for stock-based compensation and
cost of product sales."
Business Highlights
- -------------------
Selected recent business highlights include:
o The company is executing successfully on its OEM strategy, with OEM's
standardizing or adding new OEMs.
o Komatsu, the world's second largest heavy equipment OEM, has
announced that it will standardize ORBCOMM on most Tier-3
Construction Machines and will continue to install ORBCOMM's
services as standard on almost every Construction class model
change. Komatsu's ORBCOMM product `KOMTRAX' can also be
retrofitted on older machines and non-Komatsu equipment to provide
information such as machine hours, operation maps, location and
engine lock capability. For more information see
www.komatsuamerica.com.
o Volvo has standardized ORBCOMM on trucks for satellite data
services and has added a new product, CareTrack, for construction
equipment. Volvo has signed an International Value-Added Reseller
agreement with ORBCOMM and is using ORBCOMM for data
communications services on Volvo Trucks North America's Volvo Link
Sentry truck product and on Volvo Construction Equipment's
CareTrack system.
o Matrix, an ORBCOMM VAR, has installed approximately 150 units on
Liebherr Group construction equipment and is working to help
Liebherr greatly expand on the number of units installed. Liebherr
Group, one of the world's leading manufacturers of construction
machinery, has annual revenues of over (euro)5.3 billion. It
manufactures cranes, earthmoving, mining cargo handling and other
manufactured products.
o Salco and GE, ORBCOMM VARs, have now received Underwriters Laboratories
approval for their hazardous rail applications to allow deployments to
monitor rail cars carrying hazardous materials.
o ORBCOMM is shipping terrestrial products using the T-Mobile network in
the third quarter of 2007. The cellular wireless technology network
will use cellular wireless communication devices creating messages that
will be aggregated with satellite messages and forwarded onto an
appropriate terrestrial communications network to the ultimate
destination. The company will be upgrading the technology capabilities
of its network operations center to combine both satellite and
terrestrial messages and deliver them as a single data stream through
its ground facilities onto the ultimate destination.
Financial Results and Highlights
- --------------------------------
Balance Sheet
- -------------
Cash and Marketable Securities as of June 30, 2007 increased $22.4 million to
$123.4 million from $101.0 million at December 31, 2006, mainly from the net
proceeds of the company's recently completed secondary offering, less investment
in satellites and other fixed assets totaling $10.0 million in the first half of
2007. The company generated almost $0.4 million of positive Cash from Operating
Activities in the first half of 2007.
Revenue
- -------
Revenue for the second quarter of 2007 was $6.6 million, an increase of $0.4
million or 5.8% over the prior year period. Service Revenue for the second
quarter of 2007 increased over the prior year quarter by 60.7% to $4.2 million.
Product Sales were $2.4 million, a 33.7% decline from the comparable period in
2006 reflecting the large volume purchase in the second quarter of 2006 by GE
for the Wal-Mart trailer installation.
Revenue for the first half of 2007 was $12.6 million, approximately the same as
the first half of 2006. Service Revenue increased 65.2% to $8.2 million for the
first six months of 2007 compared to the first half of 2006. Product Sales
decreased 42.6% for the first six months of 2007 to $4.4 million from the sale
of subscriber communicators and peripheral equipment to GE for installation on
Wal-Mart trailers in the first half of 2006.
Billable Subscriber Communicators
- ---------------------------------
The company has in the past reported billable subscriber communicators, which
were defined as subscriber communicators activated and currently billing or
expected to be billing within 30 to 90 days. However, due to the difficulty in
forecasting the timing of deployments of subscriber communicators held by the
company's VARs, the company believes it is difficult to forecast with a
reasonable degree of certainty whether activated units are expected to be
billing within the 30 to 90-day timeframe. As a result, the company is revising
its definition of billable subscriber communicators to now mean subscriber
communicators that are shipped and activated for usage and billing at the
request of the customer, without forecasting a timeframe for when individual
units will be generating usage and be billing. With the commencement of sales of
terrestrial hardware and services in the third quarter of 2007, billable
subscriber communicators will also include terrestrial units shipped and
activated for usage and billing on the cellular communications network of the
company's service provider. Please see the company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2007 filed this morning for a further
discussion of the changes to the company's billable subscriber communicator
measure.
Under the revised definition of billable subscriber communicators described
above, as of June 30, 2007, there were approximately 278,000 billable subscriber
communicators on the ORBCOMM data communications system, compared to
approximately 225,000 billable subscriber communicators as of December 31, 2006,
an increase of approximately 23.6% for the first half of 2007. The company
believes that the billable subscriber communicator count as of June 30, 2007
under the company's previous definition included a number of units, estimated to
be about 5% of the total count, that based on information learned from a large
VAR are now expected to be billing outside the 30 to 90-day timeframe. This VAR
indicated negative macroeconomic events in its end markets are leading to
cautious investment spending by customers in its aftermarket product. In
addition, delays in obtaining certifications of product capabilities and
compliance required for safe operations of another completed application also
created delays in deployments that have since been resolved. This large VAR
indicated to the company it expects these units to be deployed in the second
half of 2007.
Costs and Expenses
- ------------------
Costs and Expenses increased 1.2%, or $0.1 million, to $9.2 million in the
second quarter of 2007 compared to the same period in the prior year. Decreases
in costs of products sold resulting from lower product sales volume were offset
by higher staffing costs reflected in the expenses for the second quarter of
2007, particularly the effect of stock-based compensation, and expenses required
as a public company, such as SEC compliance, investor relations and directors
and officers insurance. Costs and Expenses in the second quarter of 2007,
excluding cost of product sales, increased 14.2%, or $0.8 million, over the
second quarter of 2006, due to increases in stock-based compensation of $1.0
million. Excluding the effect of stock-based compensation for the second
quarters of 2007 and 2006, Costs and Expenses less cost of product sales in the
second quarter of 2007 decreased $0.1 million or 1.8% over the prior year
period.
For the first six months of 2007, Costs and Expenses increased $0.3 million, or
1.5% to $19.4 million, primarily for the same reasons described above, but also
including increases in stock-based compensation of $2.5 million over the first
six months of 2006. Excluding the effect of stock-based compensation for the
first six months of 2007 and 2006, respectively, Costs and Expenses less cost of
product sales in the first six months of 2007 increased $0.5 million or 4.2%
over the prior year period.
Net Loss
- --------
Net loss was $1.3 million for the second quarter 2007, including stock-based
compensation of $1.1 million, versus a net loss of $2.3 million in the prior
year period, including stock-based compensation of $0.1 million.
Net loss for the second quarter of 2007 was $1.3 million, or $0.03 per common
share (basic and diluted), in 2007, versus a net loss for the second quarter of
2006 of $2.3 million, or $0.84 per common share (basic and diluted). Net loss
for the first six months of 2007 was $4.2 million, or $0.11 per common share
(basic and diluted), versus a net loss for the first six months of 2006 of $5.4
million, or $1.80 per common share (basic and diluted).
EBITDA and Adjusted EBITDA
- --------------------------
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 company's operations. 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 less stock-based compensation expense (Adjusted
EBITDA) is useful to investors to evaluate the company's core operating results
and financial performance, because the exclusion of stock-based compensation
expense is useful given the significant variation in expense that can result
from changes in the fair market value of the company's common stock. 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 among other
financial tables at the end of this release.
EBITDA for the second quarter of 2007 was a loss of $2.0 million, compared to a
loss of $2.1 million in the second quarter 2006. EBITDA for the first six months
of 2007 was a loss of $5.6 million, compared to a loss of $5.0 million for 2006,
due primarily to the increases in stock-based compensation, as described above.
Adjusted EBITDA for the second quarter of 2007 was a loss of $0.9 million, an
improvement of 55.1% over the loss of $2.0 million in the second quarter of
2006. Adjusted EBITDA for the first six months of 2007 was a loss of $2.6
million, an improvement of 43.4% compared to a loss of $4.6 million for the
first six months of 2006.
Guidance For The Remainder of 2007
- ----------------------------------
The company is revising its full-year 2007 guidance to a range of 125,000 to
150,000 net additions of billable subscriber communicators, which under the
revised measure adopted by the company will include approximately 10,000
terrestrial subscriber communicators, versus its prior guidance for full year
2007 of billable subscriber communicator net additions in the range of 150,000
to 170,000 subscriber communicators under the previous definition. The company
is also updating its full-year 2007 revenue guidance to between $28 million and
$31 million, due mostly to lower than expected product sales by our subsidiary
Stellar, and the result of delays in adding subscriber communicators, versus
previous full-year 2007 revenue guidance of between $34 and $38 million. This
revised guidance is the result of new information obtained from the company's
VARs about their second half prospects. In addition, international markets have
experienced more modest growth than projected due to the delays developing and
modifying regional applications. The company does not believe the reduction in
guidance is due to lost opportunities, but rather related to delayed spending by
end users.
Net additions of billable subscriber communicators are still expected to be
higher in the second half above first half 2007 levels, as OEMs are expected to
start standardizing ORBCOMM services into their product offerings.
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
ORBCOMM's business and address questions.
Domestic participants should dial 800-683-1525 at least ten minutes prior to the
start of the call. International callers should dial 973-872-3197. The
conference call identification number is 8533512. A replay of the call will be
available from approximately 12:00 PM ET on Tuesday, August 14, 2007 through
11:59 AM ET on Monday, August 22, 2007. To access the replay, please
dial 877-519-4471 domestically or 973-341-3080 internationally and enter
identification number 8533512.
Alternatively, to access the live webcast, please visit the company's website at
www.orbcomm.com, click on "Investor Relations" and select "Presentations and
Webcasts" An archive of the webcast will be available following the call for one
week.
About ORBCOMM Inc.
- ------------------
ORBCOMM is a leading global satellite data communications company, focused on
Machine-to-Machine (M2M) communications. Its customers include General Electric,
Caterpillar Inc., Volvo Group and Komatsu Ltd. among other industry leaders. By
means of a global network of 29 low-earth orbit (LEO) satellites and
accompanying ground infrastructure, ORBCOMM's low-cost and reliable two-way data
communications products and services track, monitor and control mobile and fixed
assets in four core markets: commercial transportation; heavy equipment;
industrial fixed assets; and marine/homeland security. The company's 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 a network control center in
Dulles, Virginia. For more information, visit www.orbcomm.com.
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 operations and are based upon management's current
estimates and projections of future results or trends. Although we believe that
our plans and objectives reflected in or suggested by these forward-looking
statements are reasonable, we may not achieve these plans or objectives. Our
actual results may differ materially from those projected as a result of certain
risks and uncertainties. These risks and uncertainties include, but are not
limited to: the 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; technological changes; pricing
pressures and other competitive factors; the inability of our international
resellers to develop markets outside the United States; satellite launch
failures, satellite launch and construction delays and cost overruns and
in-orbit satellite failures or reduced performance; 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; financial market conditions and the results of financing efforts;
political, legal regulatory, governmental, administrative and economic
conditions and developments in the United States and other countries and
territories in which we operate; 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.
Contacts
- --------
Investor Inquiries: Media Inquiries:
- ------------------ ---------------
Robert Costantini Jennifer Lattif
Chief Financial Officer, ORBCOMM Inc. The Abernathy MacGregor Group
703-433-6305 212-371-5999
Costantini.robert@orbcomm.com jcl@abmac.com
ORBCOMM Inc.
Condensed Consolidated Balance Sheet
(in thousands, except share data)
(Unaudited)
June 30, December 31,
2007 2006
----------------- ----------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 76,361 $ 62,139
Marketable securities 47,050 38,850
Accounts receivable, net of allowances for doubtful
accounts of $418 and $297 as of June 30, 2007 and
December 31, 2006 5,487 5,185
Inventories 3,085 3,528
Advances to contract manufacturer 153 177
Prepaid expenses and other current assets 1,159 1,354
----------------- ----------------------
Total current assets 133,295 111,233
Long-term receivable 372 372
Satellite network and other equipment, net 43,197 29,131
Intangible assets, net 6,315 7,058
Other assets 306 299
----------------- ----------------------
TOTAL ASSETS $ 183,485 $ 148,093
================= ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,821 $ 3,438
Accrued liabilities 4,518 4,915
Current portion of deferred revenue 2,202 2,083
----------------- ----------------------
Total current liabilities 15,541 10,436
Note payable - related party 971 879
Deferred revenue, net of current portion 8,118 8,066
----------------- ----------------------
Total liabilities 24,630 19,381
----------------- ----------------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.001; 250,000,000 shares
authorized; 41,294,471 and 36,923,715 shares issued
and outstanding as of June 30, 2007 and December 31,
2006 41 37
Additional paid-in capital 223,360 188,917
Accumulated other comprehensive loss (463) (395)
Accumulated deficit (64,083) (59,847)
----------------- ----------------------
Total stockholders' equity 158,855 128,712
----------------- ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 183,485 $ 148,093
================= ======================
ORBCOMM Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------------- ----------------------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
Revenues:
Service revenues $ 4,217 $ 2,624 $ 8,167 $ 4,945
Product sales 2,410 3,637 4,421 7,696
------------- ------------- ------------- -------------
Total revenues 6,627 6,261 12,588 12,641
------------- ------------- ------------- -------------
Costs and expenses (1):
Costs of services 1,966 2,109 4,319 4,166
Costs of product sales 2,532 3,254 4,638 7,330
Selling, general and administrative 4,485 3,220 9,796 6,548
Product development 257 544 617 1,042
------------- ------------- ------------- -------------
Total costs and expenses 9,240 9,127 19,370 19,086
------------- ------------- ------------- -------------
Loss from operations (2,613) (2,866) (6,782) (6,445)
Other income (expense):
Interest income 1,339 586 2,618 1,041
Other income 30 140 33 140
Interest expense (53) (110) (105) (127)
------------- ------------- ------------- -------------
Total other income 1,316 616 2,546 1,054
------------- ------------- ------------- -------------
Net loss $ (1,297) $ (2,250) $ (4,236) $ (5,391)
============= ============= ============= =============
Net loss applicable to common shares $ (1,297) $ (4,806) $ (4,236) $ (10,254)
============= ============= ============= =============
Net loss per common share:
Basic and diluted $ (0.03) $ (0.84) $ (0.11) $ (1.80)
============= ============= ============= =============
Weighted average common shares outstanding:
Basic and diluted 38,669 5,690 37,857 5,690
============= ============= ============= =============
(1) Stock-based compensation included in costs and expenses:
Costs of services $ 90 $ 9 $ 310 $ 17
Costs of product sales 58 - 87 -
Selling, general and administrative 905 72 2,542 400
Product development 30 5 72 10
------------- ------------- ------------- -------------
$ 1,083 $ 86 $ 3,011 $ 427
------------- ------------- ------------- -------------
ORBCOMM Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six months ended
June 30,
--------------------------------------
2007 2006
------------------ ------------------
Cash flows from operating activities:
Net loss $ (4,236) $ (5,391)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Change in allowance for doubtful accounts 121 (56)
Inventory impairments - 336
Depreciation and amortization 1,138 1,283
Accretion on note payable - related party 66 66
Stock-based compensation 3,011 427
Changes in operating assets and liabilities:
Accounts receivable (423) (1,316)
Inventories 443 (548)
Advances to contract manufacturer 24 467
Prepaid expenses and other current assets 188 (1,086)
Accounts payable and accrued liabilities (148) (1,778)
Deferred revenue 171 894
------------------ ------------------
Net cash provided by (used in) operating activities 355 (6,702)
------------------ ------------------
Cash flows from investing activities:
Capital expenditures (9,596) (5,666)
Purchases of marketable securities (29,700) (24,250)
Sales of marketable securities 21,500 -
------------------ ------------------
Net cash used in investing activities (17,796) (29,916)
------------------ ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with secondary
public offering, net of underwriters' discounts and commissions and
offering costs of $2,405 31,922 -
Proceeds from issuance of Series B preferred stock,
net of issuance costs of $113 - 1,465
Proceeds from exercise of warrants 392 -
Payment of offering costs in connection with initial public offering (609) -
Payment of Series A preferred stock dividends - (8,027)
------------------ ------------------
Net cash provided by (used in) financing activities 31,705 (6,562)
------------------ ------------------
Effect of exchange rate changes on cash and cash equivalents (42) (156)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents 14,222 (43,336)
Cash and cash equivalents:
Beginning of period 62,139 68,663
------------------ ------------------
End of period $ 76,361 $ 25,327
================== ==================
Supplemental cash flow disclosures:
Non cash financing activities -
Preferred stock dividends accrued $ - $ 4,357
================== ==================
The following table reconciles our Net Loss to EBITDA and Adjusted EBITDA for
the periods shown:
Three months ended Six months ended
June 30, June 30,
- -----------------------------------------------------------------------------------------------------------------
2007 2006 2007 2006
- -----------------------------------------------------------------------------------------------------------------
(in thousands)
Net loss $(1,297) $(2,250) $(4,236) $(5,391)
Net interest (income)/ expense (1,286) (476) (2,513) (914)
Provision for income taxes - - - -
Depreciation and amortization 596 628 1,138 1,283
------------------- ---------------- ---------------- ----------------
EBITDA $(1,987) $(2,098) $(5,611) $(5,022)
=================== ================ ================ ================
Stock-based compensation 1,083 86 3,011 427
=================== ================ ================ ================
Adjusted EBITDA $(904) $(2,012) $(2,600) ($4,595)
=================== ================ ================ ================