Exhibit 99
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[Logo of ORBCOMM]
ORBCOMM NARROWS NET LOSS IN THE FIRST QUARTER OF 2008
- Net Additions of Nearly 29,000 Billable Subscriber Communicators -
- Total Revenues Decrease 1.4%, Service Revenues Increase 22.9% -
Fort Lee, NJ, May 8, 2008 - 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 first quarter ended
March 31, 2008.
The following financial highlights are in thousands of dollars, except per share
data and average shares outstanding.
For the three months ended March 31,
2008 2007
Total Revenues $5,879 $5,961
Service Revenues $4,855 $3,950
Product Sales $1,024 $2,011
Net Loss $(534) $(2,939)
Net Loss per Common Share $(0.01) $(0.08)
Average Shares Outstanding (basic and diluted) 41,803,000 37,036,000
EBITDA (1) (3) $(602) $(3,624)
Adjusted EBITDA (2) (3) $208 $(1,696)
(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, less stock-based compensation
expense. ((3)) A table presenting EBITDA and Adjusted EBITDA, reconciled to
GAAP Net Loss is among other financial tables at the end of this release.
See below.
Total Revenues for the quarter ended March 31, 2008 were $5.9 million, a
decrease of 1.4% compared to the first quarter of 2007. Service Revenues
increased 22.9% to $4.9 million for the first quarter from the comparable period
of 2007 due primarily to an increase in the billable subscriber communicator
base. Product Sales decreased in the first quarter by $1.0 million or 49.1% from
the first quarter of 2007 due to a decline in purchases from a large value-added
reseller in the transportation sector.
The Company reported a net loss of $0.5 million in the first quarter of 2008, an
improvement of 81.8% compared to a net loss of $2.9 million in the first quarter
of 2007. Costs and Expenses decreased 29.5%, or $3.0 million, to $7.1 million in
the first quarter of 2008 compared to the same period in the prior year,
including a gain from the settlement of claims from ORBCOMM Japan of $0.9
million, comprised of cash and a 37% equity interest. Costs and Expenses
primarily related to service revenues (excluding cost of product sales and gain
on settlement) decreased 16.1% in the first quarter of 2008 compared to the
first quarter of 2007.
At March 31, 2008, ORBCOMM reported approximately 380,000 billable subscriber
communicators, representing net additions of nearly 29,000, or an increase of
8.1%, over the company's base of billable subscriber communicators at December
31, 2007. In the first quarter of 2008, more than 60% of the net additions
resulted from original equipment manufacturer (OEM) installations.
"The increasing growth of subscriber communicators coming from OEM customers
demonstrates the wide adoption of ORBCOMM as the standard for commercial OEM
telematics, a business that provides more predictable revenue growth," said Marc
Eisenberg, ORBCOMM's Chief Executive Officer. "While Product Sales from our
subsidiary are down year-over-year, reflecting the shift from Aftermarket sales
to OEM sales, other ORBCOMM-certified manufacturers are showing significant
volume increases that will support the future growth in subscriber communicator
additions."
"We also improved our profitability metrics by growing Service Revenues 22.9%
over the prior year quarter and reducing Costs and Expenses related to service
revenues by 16.1%," said Robert Costantini, ORBCOMM's Chief Financial Officer.
"The operating leverage of our business model will continue to move us toward
profitability as we grow the subscriber communicator base that drives Service
Revenues."
"We are always looking for new opportunities to grow and enhance our business,
as demonstrated by our recent business highlights," added Mr. Eisenberg. "The
added spectrum gained by the Federal Communications Commission's extension of
our license allows us to improve our service; our interest in ORBCOMM Japan
enhances our presence in the Asia region; and new technologies, such as the
dual-mode product by Wavecom, enable us to shorten the development cycle of our
value-added resellers."
Business Highlights
- -------------------
Selected recent business highlights include:
o The Federal Communications Commission approved ORBCOMM's
next-generation constellation, assigned additional spectrum for
ORBCOMM's use, renewed the space station license for an additional
fifteen year term until the year 2025, and approved ORBCOMM's operation
of the Automatic Identification System, a maritime tracking signal
receiver. These actions support ORBCOMM's next-generation orbital
deployment plan, which will enhance the global coverage provided by the
current ORBCOMM satellite constellation and allow the Company to
implement a variety of enhanced subscriber services.
o ORBCOMM and Wavecom (Paris:AVM) (NASDAQ:WVCM) entered into a joint
marketing agreement whereby the two companies will address the growing
demand for devices that combine both satellite and terrestrial wireless
communications. Wavecom intends to promote dual-mode services that
combine ORBCOMM with terrestrial wireless networks. In addition,
Wavecom announced the Wavecom Q52 Omni Wireless device providing a
combination of cellular, satellite and GPS technology on a single
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device. The Q52 embodies unprecedented integration by embedding control
of all three technologies on a single processor, enabling significant
cost savings over existing multiprocessor solutions.
o The Company obtained a 37% stake in ORBCOMM Japan Ltd., enabling it to
better serve Japan and surrounding countries. ORBCOMM intends to
increase its ownership in ORBCOMM Japan to 51%, which will enable
ORBCOMM to market its services in Japan directly to its International
Value-Added Resellers and will give ORBCOMM greater control over the
operations in the important Japanese market.
Financial Results and Highlights
- --------------------------------
Balance Sheet
Cash and Cash Equivalents as of March 31, 2008 decreased $1.2 million to $114.4
million from $115.6 million at December 31, 2007. This decrease was attributable
mainly to the Company's investment in satellites and other fixed assets totaling
$1.5 million. In the first quarter of 2008, net cash generated by operating
activities was $0.1 million.
Revenue
Total Revenues for the first quarter of 2008 were $5.9 million, a decrease of
$0.1 million, or 1.4%, from the prior-year period. Service Revenues for the
first quarter were $4.9 million, an increase of $0.9 million or 22.9% over the
prior-year's first quarter due primarily to an increase in the billable
subscriber communicator base. Product Sales were $1.0 million, a 49.1% decrease
from the comparable period in 2007 due to lower communicator unit sales to a
large value-added reseller in the transportation sector.
Billable Subscriber Communicators
Billable subscriber communicators are defined as 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 billing. It includes terrestrial as well as satellite units.
As of March 31, 2008, there were approximately 380,000 billable subscriber
communicators, compared to 351,000 billable subscriber communicators as of
December 31, 2007, an increase of 8.1%. Billable subscriber communicator net
additions of nearly 29,000 units for the first quarter of 2008 represented an
increase of 12.8% over the net additions of billable subscriber communicators in
the first quarter of 2007.
Costs and Expenses
Costs and Expenses decreased 29.5%, or $3.0 million, to $7.1 million in the
first quarter of 2008 compared to the same period in the prior year, including a
gain from the settlement of claims from ORBCOMM Japan of $0.9 million, comprised
of cash and a 37% equity interest. The settlement gain resulted from
distributions related to a bankruptcy rehabilitation plan. Costs and Expenses in
the first quarter of 2008, excluding Cost of Product Sales and Gain on Customer
Claims Settlement, decreased 16.1%, or $1.3 million, over the first quarter of
2007, primarily due to decreases in stock-
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based compensation of $1.1 million and professional fees of $0.4 million offset
by increases in other employee costs.
Net Loss
Net loss was reduced to $0.5 million for the first quarter of 2008 compared to a
net loss of $2.9 million in the prior period, an improvement of 81.8%.
ORBCOMM's net loss per common share was $0.01 for the three months ended March
31, 2008 compared to net loss per common share of $0.08 for the prior year
quarter.
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, including our ability to obtain and
maintain our customers, our ability to operate our business effectively, the
efficiency of our employees and the profitability associated with their
performance; it also helps our management and investors to meaningfully evaluate
and compare the results of our operations from period to period on a consistent
basis by removing the impact of our financing transactions and the depreciation
and amortization impact of capital investments from our 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, 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 first quarter of 2008 was negative $0.6 million, compared to an
EBITDA of negative $3.6 million in the first quarter of 2007.
Adjusted EBITDA for the first quarter of 2008 was $0.2 million, compared to an
Adjusted EBITDA of negative $1.7 million in the first quarter of 2007. This is
the second consecutive quarter of positive Adjusted EBITDA, with the improvement
due to an increase in Service Revenues and a reduction in Costs and Expenses,
including the settlement gain.
2008 Guidance
- -------------
The company is maintaining the 2008 guidance previously issued. For 2008,
ORBCOMM expects net additions for billable subscriber communicators of between
170,000 and 190,000 units. This
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represents an increase of between 48% and 54% to the total subscriber
communicator base. The Company expects Service Revenues to be between $22
million and $25 million.
ORBCOMM expects positive full-year Adjusted EBITDA for 2008.
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 800-254-5933 at least ten minutes prior to the
start of the call. International callers should dial 973-409-9255. The
conference call identification number is 46344235. To hear a live web simulcast
or to listen to the archived webcast following completion of the call, please
visit the Company's 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 800-642-1687
domestically or 706-645-9291 internationally and enter reservation
identification number 46344235. The replay will be available from approximately
12:00 PM ET on Friday, May 9, 2008, through 11:59 PM ET on Thursday, May 15,
2008.
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
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incur; demand for and market acceptance of our products and services and the
applications developed by our resellers; loss or decline in business from the
Asset Intelligence division of General Electric Company ("GE"), value-added
resellers, or VARs, and international value-added resellers, or IVARs;
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 to launch the Coast Guard demonstration satellite by the definitive
launch date; 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
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ORBCOMM Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
March 31, December 31,
2008 2007
------------------------ ------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 114,400 $ 115,587
Accounts receivable, net of allowances for doubtful accounts
of $203 and $388 4,110 5,284
Inventories 3,538 2,722
Advances to contract manufacturer 158 158
Prepaid expenses and other current assets 994 1,078
------------------------ ------------------------
Total current assets 123,200 124,829
Long-term receivable 230 542
Investment in affiliate 640 -
Satellite network and other equipment, net 51,322 49,704
Intangible assets, net 5,200 5,572
Other assets 991 992
Deferred tax assets 184 184
------------------------ ------------------------
Total assets $ 181,767 $ 181,823
======================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,340 $ 4,373
Accrued liabilities 12,498 12,305
Current portion of deferred revenue 1,590 1,435
------------------------ ------------------------
Total current liabilities 17,428 18,113
Note payable - related party 1,296 1,170
Deferred revenue, net of current portion 1,656 1,507
Other liability 184 184
------------------------ ------------------------
Total liabilities 20,564 20,974
------------------------ ------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.001; 250,000,000 shares authorized;
41,872,329 and 41,658,066 shares issued and outstanding 42 42
Additional paid-in capital 225,842 224,899
Accumulated other comprehensive loss (711) (656)
Accumulated deficit (63,970) (63,436)
------------------------ ------------------------
Total stockholders' equity 161,203 160,849
------------------------ ------------------------
Total liabilities and stockholders' equity $ 181,767 $ 181,823
======================== ========================
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ORBCOMM Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended
March 31,
--------------------------------------
2008 2007
----------------- -----------------
Revenues:
Service revenues $ 4,855 $ 3,950
Product sales 1,024 2,011
----------------- -----------------
Total revenues 5,879 5,961
----------------- -----------------
Costs and expenses (1):
Costs of services 2,034 2,353
Costs of product sales 1,281 2,106
Selling, general and administrative 4,445 5,311
Product development 256 360
Gain on customer claims settlement (876) -
----------------- -----------------
Total costs and expenses 7,140 10,130
----------------- -----------------
Loss from operations (1,261) (4,169)
Other income (expense):
Interest income 766 1,279
Other income 11 3
Interest expense (50) (52)
----------------- -----------------
Total other income 727 1,230
----------------- -----------------
Net loss $ (534) $ (2,939)
================= =================
Net loss per common share:
Basic and diluted $ (0.01) $ (0.08)
================= =================
Weighted average common shares outstanding:
Basic and diluted 41,803 37,036
================= =================
(1) Stock-based compensation included in costs and expenses:
Costs of services $ 48 $ 220
Costs of product sales 20 29
Selling, general and administrative 727 1,637
Product development 15 42
----------------- -----------------
$ 810 $ 1,928
================= =================
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ORBCOMM Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended
March 31,
-----------------------------------------------
2008 2007
---------------------- ---------------------
Cash flows from operating activities:
Net loss $ (534) $ (2,939)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Change in allowance for doubtful accounts (185) (2)
Depreciation and amortization 648 542
Accretion on note payable - related party 33 33
Stock-based compensation 810 1,928
Gain on customer claims settlement (640) -
Changes in operating assets and liabilities:
Accounts receivable 1,671 142
Inventories (816) 1,400
Advances to contract manufacturer - 27
Prepaid expenses and other current assets 84 (514)
Accounts payable and accrued liabilities (1,236) 105
Deferred revenue 304 13
---------------------- ---------------------
Net cash provided by operating activities 139 735
---------------------- ---------------------
Cash flows from investing activities:
Capital expenditures (1,458) (3,007)
Purchases of marketable securities - (19,050)
Sales of marketable securities - 6,800
---------------------- ---------------------
Net cash used in investing activities (1,458) (15,257)
---------------------- ---------------------
Cash flows from financing activities:
Proceeds from exercise of warrants 133 -
Payment of offering costs in connection with initial public offering - (599)
Payment of offering costs in connection with secondary public offering (40) -
---------------------- ---------------------
Net cash provided by (used in) financing activities 93 (599)
---------------------- ---------------------
Effect of exchange rate changes on cash and cash equivalents 39 (6)
---------------------- ---------------------
Net decrease in cash and cash equivalents (1,187) (15,127)
Cash and cash equivalents:
Beginning of period 115,587 62,139
---------------------- ---------------------
End of period $ 114,400 $ 47,012
====================== =====================
Supplemental cash flow disclosures:
Non cash investing activities -
Capital expenditures incurred not yet paid $ 1,895 $ 5,630
====================== =====================
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The following table reconciles our Net Income (Loss) to EBITDA and Adjusted
EBITDA for the periods shown:
Three months ended
March 31,
(in thousands) 2008 2007
-------------- ---- ----
Net Loss $(534) $(2,939)
Net interest (income) expense (716) (1,227)
Provision for income taxes - -
Depreciation and amortization 648 542
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EBITDA (602) (3,624)
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Stock-based compensation 810 1,928
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Adjusted EBITDA $ 208 $(1,696)
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