Exhibit 99
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[Logo of ORBCOMM]
ORBCOMM ANNOUNCES TOTAL REVENUES INCREASE 25.2%
SERVICE REVENUES INCREASE BY 36.5%
- Company Extends Agreement with GEAI Through 2013 -
Fort Lee, NJ, May 11, 2009 - 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, 2009.
The following financial highlights are in thousands of dollars, except per
share.
Three months ended
March 31,
2009 2008
---- ----
Total Revenues $7,361 $5,879
Service Revenues $6,627 $4,855
Product Sales $734 $1,024
Operating Income (Loss) $(9,043) $(1,261)
Net Income (Loss) $(9,135) $(534)
Net Income (Loss) per Common Share $(0.22) $(0.01)
EBITDA (1) (3) $(7,826) $(602)
Adjusted EBITDA (2) (3) $(290) $208
(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, noncontrolling interests, and Impairment Loss.
(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, 2009 were $7.4 million, an
increase of 25.2% from the first quarter of 2008. Service Revenues for the first
quarter of 2009 increased 36.5% to $6.6 million from the comparable period of
2008 due primarily to an increase in billable subscriber communicators, and
revenue from Automatic Identification System (AIS). Product Sales decreased in
the first quarter by $290,000, or 28.3%, from the first quarter of 2008, and are
consistent with the Company's efforts to focus on Service Revenue growth. The
company's strategy is to focus on the generation of revenue through its network
and exit the hardware business to attract multiple hardware vendors to support,
develop, and distribute ORBCOMM enabled modems.
ORBCOMM recorded a $7.0 million Impairment Loss associated with one of the six
recently launched satellites that lost communication contact with ORBCOMM's
control center as previously disclosed. The Company expects to be filing shortly
a claim for $50 million from third party insurers under the in-orbit insurance
policy that, under certain circumstances, covers the total loss or constructive
total loss of all the satellites launched in June 2008.
Costs and Expenses in the first quarter of 2009 were $16.4 million; an increase
of $9.3 million compared to the same period in the prior year, which was
impacted by the $7.0 million Impairment Loss this quarter and a gain from
customer claims settlement in the prior year period. Costs and
Expenses excluding Costs of Product Sales and excluding the Impairment Loss and
last year's gain in the first quarter increased 22.5% or $1.5 million. The
higher costs are associated with operational expenses including depreciation of
$0.6 million mostly due to the Coast Guard satellite, network expenses of $0.3
million and maintenance of $0.2 million. Also higher in the quarter was an
increase in bad debt reserves, offset by lower stock-based compensation and
other expenses. Costs and Expenses were further driven by unexpected expenses,
such as approximately $0.1 million related to the preparation of the pending
satellite insurance claim and costs of approximately $0.2 million associated
with the company's successful shareholder proxy vote.
Operating loss for the first quarter ended March 31, 2009 was $9.0 million
compared to $1.3 million loss in the first quarter of 2008, largely driven by
the $7.0 million Impairment Loss and other items as described above. Interest
income of $41,000, a $725,000 decline over the prior year quarter, and a modest
foreign exchange loss further contributed to the Net Loss experienced in the
first quarter of 2009. Net Loss for the quarter was $9.1 million versus $534,000
in the first quarter of 2008.
At March 31, 2009, there were more than 476,000 billable subscriber
communicators, a 25.4% increase over the first quarter of 2008. Net satellite
subscriber additions during the quarter were over 16,000 while net terrestrial
subscribers were flat due to disconnects from one customer. During the first
quarter of 2009, more than 90% of net additions were attributable to
installations by Original Equipment Manufacturers (OEMs).
"While the financial results were affected by several unanticipated costs during
the quarter, management remained focused on growing the business and navigating
through the current economic environment," said Marc Eisenberg, ORBCOMM's Chief
Executive Officer. "April was highlighted by the settlement and services
agreements with General Electric Asset Intelligence. The agreement also resolves
a number of issues to resume growth in GEAI related subscribers and clears a
major hurdle for a potential sale of Stellar with minimal impact on our service
network."
"The negative impact from the costs associated with our successful shareholder
proxy vote, in addition to other unplanned expenses in the quarter, led to the
negative Adjusted EBITDA in the first quarter of 2009," said Robert Costantini,
ORBCOMM's Chief Financial Officer. "However, we are encouraged by the continued
resiliency in Service Revenue growth and we expect the actions we have taken to
reduce spending, including the sale of Stellar, our hardware subsidiary, to keep
increases in costs and expenses at moderate levels should improve Adjusted
EBITDA as the year progresses."
Business Highlights
- -------------------
Selected recent business highlights include:
o General Electric Asset Intelligence (GEAI) and ORBCOMM entered into
settlement and services agreements. ORBCOMM has the right to be the
sole provider to GEAI of M2M data communications on all subscriber
communicators managed by GEAI in the United States, Canada, and Mexico,
whether satellite, cellular, or dual mode (cellular plus satellite)
generally as long as ORBCOMM provides competitive services at
competitive rates with appropriate regulatory approvals, subject to the
terms of the agreement. Upon signing these agreements, GEAI paid a
one-time settlement fee
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and extended its IVAR agreement with ORBCOMM through December 31, 2013,
which coincides with the exclusivity agreement.
o ORBCOMM signed several OEM agreements through April 2009. In addition
to the Doosan Infracore America agreement highlighted in the year-end
results, Hyundai Heavy Industries began using ORBCOMM's network for
global OEM heavy equipment telematics. Additionally, Manitowoc Crane
Companies, Inc., the world's largest manufacturer of cranes, began
using the ORBCOMM satellite network for the CraneSTAR crane-tracking
and asset management system.
o The company continues to make progress in implementing and growing its
AIS business. ORBCOMM has been recognizing revenue from the U.S. Coast
Guard, Lloyds Register-Fairplay, and PortVision, a player in the
terrestrial AIS space. ORBCOMM continues to convert prior test
agreements into distribution and utilization agreements in order to
monetize this potentially lucrative business opportunity.
o ORBCOMM and Telenor Connexion announced an agreement to offer global
low-cost connectivity solutions for M2M communications. This agreement
expands ORBCOMM's terrestrial reseller partnerships across the globe
into more than 100 countries where Telenor is able to provide service.
Financial Results and Highlights
- --------------------------------
Revenue
Total Revenues for the first quarter of 2009 were $7.4 million, an increase of
25.2% from the first quarter of 2008. Service Revenues for the first quarter
were $6.6 million, an increase of $1.8 million, or 36.5%, over the prior-year's
first quarter due primarily to an increase in billable subscriber communicators,
and a contribution from the commencement of AIS revenue. Product Sales decreased
in the first quarter by $290,000, or 28.3%, from the first quarter of 2008 due
to product sales to a large VAR in the prior year that did not repeat.
Billable Subscriber Communicators
As of March 31, 2009, there were more than 476,000 billable subscriber
communicators, compared to approximately 380,000 billable subscriber
communicators as of March 31, 2008, an increase of 25.4%.
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.
Costs and Expenses
ORBCOMM recorded a $7.0 million Impairment Loss associated with one of the six
recently launched satellites that lost communication contact with ORBCOMM's
control center as previously disclosed. Costs and Expenses in the first quarter
of 2009 were $16.4 million; an increase of $9.3 million compared to the same
period in the prior year, which was impacted by the $7.0 million
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Impairment Loss this quarter and a gain from customer claims settlement in the
prior year period. Costs and Expenses excluding Costs of Product Sales and
excluding the Impairment Loss and last year's gain in the first quarter
increased 22.5% or $1.5 million. The higher costs are associated with
operational expenses including depreciation of $0.6 million mostly due to the
Coast Guard satellite, network expenses of $0.3 million and maintenance of $0.2
million. Also higher in the quarter was an increase in bad debt reserves, offset
by lower stock-based compensation and other expenses. Costs and Expenses were
further driven by unexpected expenses, such as approximately $0.1 million
related to the preparation of the pending satellite insurance claim and costs of
approximately $0.2 million associated with the company's successful shareholder
proxy vote.
Net Loss
Net Loss widened to $9.1 million for the first quarter 2009 compared to a Net
Loss of $534,000 in the prior year period. The key contributor to the widening
loss was the Impairment Loss associated with one of the quick launch satellites,
which contributed $7.0 million to Net Loss during the quarter and higher
depreciation mostly due to the Coast Guard satellite.
ORBCOMM's Net Loss per Common Share was $0.22 for the three months ended March
31, 2009 compared to Net Loss per Common Share of $0.01 for the prior year
quarter. Excluding the Impairment Loss, ORBCOMM's Net Loss per Common Share
would have been $0.05.
EBITDA and Adjusted EBITDA
EBITDA for the first quarter of 2009 was negative $7.8 million, compared to an
EBITDA of negative $0.6 million in the first quarter of 2008.
Adjusted EBITDA for the first quarter of 2009 was negative $0.3 million,
compared to an Adjusted EBITDA of positive $0.2 million in the first quarter of
2008. Adjusted EBITDA now excludes the non-cash Impairment Loss for the Quick
Launch satellite that the company lost contact with in February 2008.
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, and Restricted Cash as of March 31, 2009 decreased $8.4
million to $72.6 million from $81.1 million at December 31, 2008. The decline is
attributable to $6.9 million in capital expenditures mainly related to payments
on the next generation satellite contract.
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.
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Domestic participants should dial 877-941-1466 at least ten minutes prior to the
start of the call. International callers should dial 480-629-9678. The
conference call identification number is 4067880. 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 800-406-7325
domestically or 303-590-3030 internationally and enter reservation
identification number 4067880. The replay will be available from approximately
12:00 PM ET on Monday, May 11, 2009, through 11:59 PM ET on Monday, May 18,
2009.
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 Caterpillar Inc.,
Doosan Infracore America, General Electric, Hitachi Construction Machinery,
Hyundai Heavy Industries, 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, 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 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 Company's 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 Company's control, that
may cause the Company's 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 the Asset
Intelligence division of General Electric Company ("GE" or "General Electric" or
"GEAI"), 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; litigation proceedings; technological
changes, pricing pressures and other competitive
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factors; the inability of our international resellers to develop markets outside
the United States; market acceptance and success of our AIS business; the
in-orbit satellite failure of the Coast Guard demonstration or the quick-launch
satellites, 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; 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, 2008.
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
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ORBCOMM Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
March 31, December 31,
2009 2008
------------------------ ------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 66,946 $ 75,370
Restricted cash 2,000 2,000
Accounts receivable, net of allowances for doubtful accounts of $512 and $227 4,190 3,750
Inventories 1,791 1,421
Prepaid expenses and other current assets 3,885 4,160
------------------------ ------------------------
Total current assets 78,812 86,701
Satellite network and other equipment, net 86,702 93,290
Intangible assets, net 3,714 4,086
Restricted cash 3,680 3,680
Inventories 1,544 2,126
Other assets 1,445 1,484
------------------------ ------------------------
Total assets $ 175,897 $ 191,367
======================== ========================
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,578 $ 8,529
Accrued liabilities 6,901 7,359
Current portion of deferred revenue 3,580 3,577
------------------------ ------------------------
Total current liabilities 13,059 19,465
Note payable - related party 1,175 1,244
Deferred revenue, net of current portion 7,394 7,607
------------------------ ------------------------
Total liabilities 21,628 28,316
------------------------ ------------------------
Commitments and contingencies
Equity:
ORBCOMM Inc. stockholders' equity
Common stock, par value $0.001; 250,000,000 shares authorized;
42,396,031 and 42,101,834 shares issued and outstanding 42 42
Additional paid-in capital 229,456 229,001
Accumulated other comprehensive income 400 538
Accumulated deficit (77,111) (67,976)
------------------------ ------------------------
Total ORBCOMM Inc. stockholders' equity 152,787 161,605
Noncontrolling interests in ORBCOMM Japan 1,482 1,446
------------------------ ------------------------
Total equity 154,269 163,051
------------------------ ------------------------
Total liabilities and equity $ 175,897 $ 191,367
======================== ========================
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ORBCOMM Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended
March 31,
--------------------------------------
2009 2008
----------------- -----------------
Revenues:
Service revenues $ 6,627 $ 4,855
Product sales 734 1,024
----------------- -----------------
Total revenues 7,361 5,879
----------------- -----------------
Costs and expenses (1):
Costs of services 3,221 2,034
Costs of product sales 1,110 1,281
Selling, general and administrative 4,804 4,445
Product development 224 256
Gain on customer claims settlement - (876)
Impairment loss-Satellite network 7,045 -
----------------- -----------------
Total costs and expenses 16,404 7,140
----------------- -----------------
Loss from operations (9,043) (1,261)
Other income (expense):
Interest income 41 766
Other income (expense) (49) 11
Interest expense (48) (50)
----------------- -----------------
Total other income (expense) (56) 727
----------------- -----------------
Net loss (9,099) (534)
Less: Net income attributable to the noncontrolling interests 36 -
----------------- -----------------
Net loss attributable to ORBCOMM Inc. $ (9,135) $ (534)
================= =================
Net loss per common share:
Basic and diluted $ (0.22) $ (0.01)
================= =================
Weighted average common shares outstanding:
Basic and diluted 42,308 41,803
================= =================
(1) Stock-based compensation included in costs and expenses:
Costs of services $ 20 $ 48
Costs of product sales - 20
Selling, general and administrative 427 727
Product development 8 15
----------------- -----------------
$ 455 $ 810
================= =================
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ORBCOMM Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended
March 31,
--------------------------------------------
2009 2008
-------------------- --------------------
Cash flows from operating activities:
Net loss $ (9,099) $ (534)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Change in allowance for doubtful accounts 285 (185)
Depreciation and amortization 1,302 648
Accretion on note payable - related party 33 33
Stock-based compensation 455 810
Foreign exchange (gains) losses 51 (11)
Non-cash portion of gain on customer claims settlement - (640)
Impairment loss-Satellite network 7,045 -
Changes in operating assets and liabilities:
Accounts receivable (725) 1,359
Inventories 212 (816)
Prepaid expenses and other assets 250 396
Accounts payable and accrued liabilities (859) (1,225)
Deferred revenue (210) 304
-------------------- --------------------
Net cash provided by (used in) operating activities (1,260) 139
-------------------- --------------------
Cash flows from investing activities - capital expenditures (6,924) (1,458)
-------------------- --------------------
Cash flows from financing activities:
Proceeds from exercise of warrants - 133
Payment of offering costs in connection with secondary public offering - (40)
-------------------- --------------------
Net cash provided by financing activities - 93
-------------------- --------------------
Effect of exchange rate changes on cash and cash equivalents (240) 39
-------------------- --------------------
Net decrease in cash and cash equivalents (8,424) (1,187)
Cash and cash equivalents:
Beginning of period 75,370 115,587
-------------------- --------------------
End of period $ 66,946 $ 114,400
==================== ====================
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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) 2009 2008
-------------- ---- ----
Net Income (Loss) $(9,135) $(534)
Net interest (income) expense 7 (716)
Provision for income taxes - -
Depreciation and amortization 1,302 648
-------- -------
EBITDA (7,826) (602)
-------- -------
Stock-based compensation 455 810
Impairment Loss - Satellite Network 7,045 -
Noncontrolling interests 36 -
-------- -------
Adjusted EBITDA $(290) $208
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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 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 ORBCOMM's management and investors to meaningfully
evaluate and compare the results of the Company's 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,
noncontrolling interests, and Impairment Loss (Adjusted EBITDA), is useful to
investors to evaluate the Company's 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.
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