IRDM - Earnings call transcript Q1 2019 | Iridium Communications Inc.

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Operator

Good morning, and welcome to the Iridium Communications First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ken Levy, please go ahead.

Kenneth Levy

Thanks Steven. to quarter welcome earnings and morning, Iridium's XXXX first call. Good

a our on Investor Today's Iridium's Desch; with you've first had today’s this I me the to earnings by CEO, results, call of followed quarter website. call begin an Fitzpatrick. Joining on trust Tom release, of are Matt which Relations Q&A. available our section CFO, and will review opportunity discussion morning's our is

participants I'd I the call that things Act all to to Before within Private of Reform our Matt, contain meaning like statements turn Litigation forward-looking of may XXXX. caution over the Securities

beliefs statements about expectations to subject which are our fully Forward-looking Such Such and not could statements plans risks results our to more and are cause expectations, statements. and discussed current Exchange and with forward-looking prospects. include in based that differ filings and statements Commission. future Securities risks are from forward-looking are historical are statements actual facts our the upon

should do we statements our while represent in we any Our remarks only some forward-looking risks. update statements and views or today, to if at specifically be such of today change. future, forward-looking of obligation point as elect our so Any to may even the light in views disclaim considered expectations

With in measures turn in Matt. measures. comparable our release these non-GAAP the we'll today's of Generally to prepared most During to that, website accordance Principles. financial to things not refer let for over also the directly certain referring to with non-GAAP be Relations non-GAAP reconciliation Accepted call, Investor are financial measures. financial me section GAAP a measures These Please the Accounting of

Matthew Desch

morning, good everyone. and Ken Thanks,

Certus other. our completion occurred aviation really of service of service, NEXT each has broadband few Aireon’s launch within busy the So, Iridium global and of rollout period a Iridium first our recently most a commercial company. groundbreaking weeks been the The for upgrade, the tracking of quarter all

achieving fruition has planning and of exciting. imagine to been years to these can our we’re network. powerful our been taking advantage rewarding and forward It’s As you come of many looking efforts new extremely and full

from and investor X, first quite a of you business during lot was presentation potential. reside participation news and the company great importantly many partnerships. base for for slides from we’ve The global Servicing on and serve about execute We’re recruiting Relations’ and attracting and we’ve and million Investor also our of media in operations, and remains our helpful Day business hosting new we of XXXX which and commerce at generating base brand, we’ve our satellite We a that on year conferences our through move had subscribers quarter and me good to Most our Iridium’s the impact reply also value safety. a X.X chance of community. busy event with on for about on roadmap customer background been through website near the network to our Apart continue for appreciate strategies. March our as who customer told you and as as well plans that’s visit and many growing investment and should understanding capital the media communications, our several and the top webcast business of the this appearances priority. our term Investor clear with coverage as

with this of is key of U.S. key two Government. renegotiation the milestones our year’s One the contracts

maintenance and still primary more contract on made line. the we’ve of the finish contract release this our EMSS to lot We it be a signed user declining and the other, time get us over prior in The for to in and together a with services DoD’s give gateway revenues maintenance reasonable from a extension is expect morning, saw GMSS nicely parties both valued and years to represents our signed you up a progress increasing markedly. cost completed per in a one five-year we contract $XX over As little a signed our step its contract million agreement XXXX contract one, month four-and-a-half the that’s a scale. to EMSS win-win due the our at increase

the be a dry Iridium in work to first subscribers now we contract, and The our commercial to contract XXX,XXX gateway is preparation the customers they’re the for continues Government Comsat. their contract on EMSS quarter delivering ink concluding case Certus Government this to In Iridium either upgrade EMSS then, procuring Until estimated Certus the U.S. U.S. available some coming through services to the Iridium Government the to with look partner gateway. months. distribution completed forward to With by our outside XXXX. ended and through U.S. of services Certus

consistent, rolled They’re I’m to reporting, to active be speed and our are and Prior the variety months formally Certus to it in since around As testing class about launched the broadband with in for very later and applications. for has we in Iridium January in aviation of Certus service and mobile be positioned will performance happy solid service. They’re in extremely broadband be completed cost, out, available January, of which has Certus customer including subscriber this land It the year with said utility means only Certus. finding beta number a surpassed sectors it are applications. maritime, users. of potential land a maritime Iridium for a Alban down of aviation users us we’re that size mobile rock launch before, the very broad extensive best today in and globe. activations for a and wide on scales very reliable, feedback the they’re both up three we Certus. trials. The speed satellite hundreds of solution customers and is the efficiently Iridium pleased early excited been

satellite the its Iridium than low Investor voice end texting speed manufactured telemetry applications during applications antennas it I As is and This been new low small will first in quite phases even Iridium from operator. of drive our platform is are more testing. of is which to devices our transceiver labs. through modem and price open highly at growth applications This XXX our hands stream a video form-factor called which providing using some in expensive partners today is a and now engineers XXXX about have will and mobile manufacture from year-end of family in and Prototypes kilobits richer and our contract of benchmark the newest data our new explained a provide. up before variety current available cost revenue the optimized a bit for pictures up transceiver now Day device of leverages our existed by in by beta hasn’t the the March, be of speed per this coming capability to able have that This Certus in been years. all partners a small to running Certus quarter should a portfolio second transceivers lower to sending point technology be and of for ranges any our

dollar product a support our but service we UK this product be the two Kinetic opportunities. of We two-way multi-billion military One those part kinds popular PTT a from think much push new grade our summer haven’t in we’ve this to is while, a of terminals satellite PTT talk partner growth radio that our in in market. market will new coming talked radio about with the to to for tactical

as PTT the reach Japanese from extending The with only networks as a customers our needs who Icom’s is remote of handheld NGOs. better other a and threshold channels great a technology. first benefit users Icom; workers the is attention military handset meet high the first our dedicated Iridium of satellite like among customers radio product in heavy The group would to product partners is manufacture lot their and distribution which satellite looking groups, PTT their talk of Icom from generating responders, well this gives performing

its now and visibility first management to and safe With data expected enhances the XX%. dynamic Icom North relationship Atlantic busy in air in It’s in by XXXX, flexibility this risk to Earlier anywhere tracked aircraft growth system surprising on as the system and North region not X,XXX corridor to that be This about Canada XX% traffic and improved Aireon With real the that now historic improves than per see for visibility earth. flights operational, Atlantic with grows. aerospace products go maintain North more our Atlantic, optimal reduce altitudes by with operation of $XXX aircraft fully nets time service. that event flight live Aireon dioxide speeds up a savings UK air by pleased emissions additional two month, safety history of the air control. surveillance yield very per of this flight in We’re over to trans in per route, overall was using cost live tones North as aerospace Aireon Atlantic announced reduction could global These in marked expect is are and relationship. the Aireon traffic carbon Atlantic first expected they’re said Aireon these went plus time with that from that aerospace will flight more to traffic control realized. have partners and day

this of we’re service. Aireon, very our groundbreaking proud to Beyond be in important part economic an interest

new We new of will over be course Iridium more summary, increasingly of the tailwinds supported opportunity saying the in it and Aireon business networks customers they business. extremely expect performance XXXX mission happy customers. In as serving The news the go Iridium now the of we’re in operational as announce our the completion by to NEXT of with our upgraded satellites. its are

the our new growth as soon that services flow to cash can enthusiastic we will DoD the shareholder activities more EMSS which rollout further financial we XXXX. profile for be expect broadband prospects about use of in we finalized of We continue our be free for the deliver with the company. friendly contract We transform will and believe

it Tom turn our financials. review I’ll Tom? for to a over of that with So,

Thomas Fitzpatrick

our in business increase improvement million the XX% $XXX.X formed from from good This the quarter. and revenue to Iridium color metrics and growth quarter $XX close major XX% guidance the last lines. on review which the for morning provide Iridium business trends this started million I’ll our position. in Matt, our we EBITDA recap and some and a increased of with was Operational was was to quarter. of and attributable first first by I’ll the in the structure get Thanks, completion up year’s our year’s program. morning, summarizing we’re financial everyone. which of a capital total prior comparable quarter the revenue was seeing liquidity key NEXT generated XXXX Then commercial

last quarter this continued first out the higher the XXXX in first data comparable the commercial as well quarter led first record incremental our year. quarter the changes commercial in higher XX% of revenues in both was last demand succeeding service revenue. increase IoT year’s in an increase prior payload to growth $X.XX April $XX of ongoing important This is year a IoT program following $XX.XX and of year. as revenue business of were by year. the revenue hosted price to that of increase the million which handset Momentum driven personal or was reflected of quarter, usage IoT this period. XX% then side quarters was reflected in ARPU by primarily first levels our point in in from remained Voice the IoT adopted location reported quarter, the XX% ARPU It in On growth and in services. we robust for $XX in XXXX. in voice from down quarter Growth rose that

expect year and full As in this services. a X% to of year-over-year communication XXXX. driver decline experienced result X% from in-line personal subscribers we moderate that decline be most significant declines with of The will notably the data be more plans year-over-year quarterly ARPU we low subsequent the addition here to continues the on

used. relative generation before, in usage data products these network Iridium noted resources particularly we terms to of As are to revenue low attractive

data from During net a subscribers up subscribers coming entirely gain from a in comparable with service $X.X period. quarter we IoT hosted all XXXX. to XX% commercial million million data this in the increased from in Commercial to quarter service IoT represent $X.X Substantially, subscribers was the our due a year-ago increased added in of now million this XX% business. billable $XX.X quarter revenues other from revenues. new Hosting higher payload data of XX,XXX commercial by

milestone You of waited recall not clear probability year, quarter second first supporting this did hosting revenues accordingly as clear milestone in Aireon the was recorded in revenues we we of XXXX last for that to $X.X quarter we million recognize year's the a of Aireon That of first quarter. hosting in collection.

in due We also by $X.X operation. satellites million of revenues $X.X to from up in data increased recorded the which million was Aireon number last year

continue Aireon data from year will month this We of a in $X.X million to that revenues a half currently to second expect about around step-up the million $X.X month.

explained, attainment $X.X $X a and trends to customer hosted service the million given revenues to to-date. number As data of current increased and the to Harris period operational this million by in occurs revenues million, we hosting payload $XXX,XXX upon a this a from previously was due data quarter quarter last year first year's true-up from the usage $X.X satellites of experienced step-up increased milestone. in

first which reported business, $XX contract. grew the In a the revenue service total first reflected million U.S. quarter, EMSS the quarter XX% and the customers record in in government government reached our government XXX,XXX a to Turning year-over-year quarter. subscribers this of terms contractual we

noted, U.S. government for the with discussion EMSS Matt a extended renew As on month. our terms has the the contract to

of a month period. U.S. remain that renewable at During DoD for $X.X period, services under this is and interim a a one existing government million our will this while ensures of This rate for reasonable EMSS agreement finalized. an Iridium in to available operate extension contract is the short-term extension step-up

recently current that years new support is is year have of and rate contract. contract the on years greater contract guidance. our expect the also term is million at a the awarded and to service. full-year a into $XX XXXX be contract higher gateway Iridium EMSS contracts our continue than a for and We maintenance last new This revenues will monthly multi-year prior in of than XXXX annual all will five factored

record largely equipment quarter; reported sales As expected, year, from latest milestone million support is ramp want pace continue in $X.X quarter Engineering was and and million to anticipate margin sales to in in which progress a model our outlook. We $XX the I the agencies quarterly driven revenue the XXXX quarter. from given from our by first in in the a year's their moderated this was To that the in $X.X to of year government year. last revenue support episodic first of this equipment data equipment quarter. hosting $XX XX% a the revenue on compared We with to highlight primarily about million full is in second $XX worked reach in in and of satisfied as few million this full-year year. half items will services run-rate assuming and million XXXX customer contract prior

a year $XX equipment final anticipate of expense year's a be service million. XXXX level will year in high. reach continue second will of rise last We will quarter again placed from the satellites that at amortization NEXT record the steady and to this forecast reflecting amortization in down Depreciation Iridium and We February. state this sales in in depreciation approximately

cash through Finally, Investor XXXX. in March Day, negligible our expects taxes highlighted now Iridium as

rate we it statutory XXXX. gradually on in between approximately million rate EBITDA starting $XXX Our a tax revenue until these to million. XXXX service range in operational $XXX forecast Based by reaches step-up continue begin $XXX and be total to to the XXXX inputs, corporate and million in will

as million Having upgrade, cash approximately invoices NEXT position, final capital pay and Moving testing the a will had to the $XXX.X Iridium of acceptance associated balance in satellite quarter. of equivalence completed now with XXXX. XXst, the cash our second the Iridium March we

final business and be of maintenance about holders. We results generation levered deliver full-year, equity CapEx approximately the our million $XX Iridium cost utility the million. on discussed be million quarterly a Investor of approximately cash we EBITDA XX%. laid guidance Day, full-year EBITDA. available with $XXX that net total related at to while CapEx methodology leverage for will the free the XXXX for our assessing will times rate today levered our Based about XXXX to previously the expects free during a a we NEXT $XX with March quarter to of For and flow we cash of flow times out our exit Iridium continue midpoint will net X.X believe EBITDA the $XXX million cash conversion the leverage at closed at and the with approximately representing X.X first costs

recall expected our dividend quarter, XXth, $X.X unpaid in This June require on last consider all Series should the or shares and as approximately and we declare anticipate Iridium investors action Iridium that outstanding pay as as in of preferred Lastly, B activities preferred done suspended they B that early second be preferred accumulated is payment year. converting to the XXth dividends May all stock. a have since will our starting dividend million. Series shares This of total can

upgraded Following now B for our XX.X capital common grow the share XXXX of year to the in XX.XXX two turn and further to of Iridium's operator its cash conversion company's the At is no preferred continue In payments well-positioned months Iridium's business shares. required. flow the attention with things back With by revenue in Q&A. basic be increases constellation Iridium will first of million we shares increasingly nicely the a reached to rate conversion the transformation. to preferred count dividend closing, share Series that, generate tied execute the I'll the meaningful financial turn to structure. flowing, upon pre shares

Operator

Instructions] with from [Operator go our Please And Prentiss Raymond you. comes first James. question Ric Thank ahead.

Ric Prentiss

morning good guys. Thanks,

Matthew Desch

Ric. morning, Good

Thomas Fitzpatrick

Ric. Hi,

Ric Prentiss

larger I back till drop you hosted ramp? of down that for of also, housekeeping items picture XQ'XX double mentioned. to color million couple A check appreciate the so you then you thanks. after payloads one. would the a hit on Can of questions then want true-ups, seasonality $X.X rest I Hi, just Tom quick and the year true-up on the the that the assume a the included

Thomas Fitzpatrick

information That well, full-year million any customer sooner all It and we knowing a did. they're to contract more milestone. Harris $XX the hosting a respect contract reflects upfront. reflection, The we going have revenue recorded of the and data where data Aireon related service was Harris use, contract. step-up in about for now usage relative they're three-year to have it's to we likely paid what it's We what the data to we that didn’t in using on the a and than that would related be think services and of do contract true-up to

And so, true-up that Ric. reflected what that's

Ric Prentiss

minor a low little expenses with to Okay. broadband, kind should How you of what And unusually this launching think a kind developing? then, forward the narrowband, about light. R&D came the in as you quarter we from other think one, as one move pivot Certus we should of about or R&D was product, the

Thomas Fitzpatrick

wasn’t low a No. it quarter.

So, R&D on be $XX million down of the the million behind to $X is is us. full-year, sort going NEXT because to R&D

$XX And on down so, it $X million I to full-year. see you'll million the said like

Ric Prentiss

Okay. as before Is color kind seeing convert in. to flow. holiday's And on you interesting capital kind I to think market you but you timing do approach out interest capital in the get appreciate Obviously holiday can about the seems you government and own the contract the their pretty free cash capital markets are the the the how summertime, capital a after summer? close markets out standpoint, of in close we rates the the there? markets, should think levered of begin what to you from

Thomas Fitzpatrick

we options our appropriate going would developments think obviously, keeping and on it, keeping we're I on we're capital we're what on the Ric. it's open. contract on eye keeping markets. I do exactly to that Well, to because eye government the that is comment development the favorable said we're say don’t so I our our just do And

Ric Prentiss

the and Analysts French facility. rates seeing think be Okay. But little flow from will there thoughts cash what you're free the that the at Day on I will or than you banks? Investor be a higher capital the the of mentioned focus Any markets ballpark from ranges out existing

Thomas Fitzpatrick

buy the get that's compelling terms shares back dividend, we'll ability in thinking Well, going makes the a to to bit the notwithstanding that expensive. that be be principle more facilities about higher the ability but flexibility amortization, fact they'll most under such definitely refinancing of we're the a pay

Ric Prentiss

right, all sense, Makes guys. thanks

Operator

Our Greg go Company. from next ahead. comes question with Please Burns Sidoti and

Greg Burns

good morning. Hi,

utility system launching you're seeing efficiencies. data just success those now any benefits the fly expect is of So from in creating there U.K. data you're getting there and maybe would obviously, for feedback they're would any narrowing that's getting Canada them the that that of kind early Aireon the they and past seeing, of and update you the early but about Aireon? are from Is the validate

Matthew Desch

what seeing never expected airplanes it while they’ve more before have with I say who would out airplanes they're they controllers with it's valuable it, turning be to heard It's I in way. service, I a like they're it's they would Atlantic. thing in a are very in to that about not everything exactly perform -- to effective can line actively seen they and expected excited that North service. changing more feeling say it anecdotal be. be the about controlling completely may

value. all example, This on be. the would Atlantic enthusiasm base, more they For in all a period to work. it's how them that lot generating and to need who system that That their be engaged statements actively be operate a But heard But for really the with etcetera free they before around to it coordinate and proving it, and for non-customers it eliminated of experienced others they time with it's positive customer maximum need get that. everything now the world including important drastic thought point-to-point I I haven’t with they to think I've seem and would preparation go would yet. how it would their really of track almost ability about get is the to exactly provide something that others only they flight FAA for from think is quite controllers the part North with be

Greg Burns

lining then customers the pipeline the for and what's the Thanks. the early the and you're from early Certus, somewhat what's then, some up kind look feedback, maybe like. And of great. adopters, of feedback service Okay, of seeing

Matthew Desch

robust it's what Again, performance with Yes. quite pleased the It's exactly world. everywhere say. of to do, said said I was product. is as reliably The in would partner it the I doing base very supposed the

thought. potential channels it's for both looking the distribution that providing they So, speeds coverage margins It's value providing and that the also expanding and the for. were business the and they

So, had we're for superior hearing that really We've of really some been a couple access was positive ability with about really, say choice customers something as to you'd looking that to even real fleets there performing. terms to have how about be are things some them kind what their might of line being of things realized. that a in on they've offer positive to get able that been and is they

and far. so major were it some partners they're saying Some pleased really who with

do. and news. take is every time This only to that heard still connected the yet good and So, to getting partner they doing early. because going completely to onboarding sell need around It ramp still I've up it's able is is to everything world. Not

kind So, said up would on I'm it's line early but still right take with the with of we sort occur. its of thought how really pleased

Greg Burns

Thanks. did year but from revenue and it's being year. this know of view you lastly, contribution not material Then on revenue about any the Okay. maybe you service quarter this Certus an updated it talked kind I this recognize

Matthew Desch

right This yet. projections first terms our revenues in were they quarter, company, is be a of sides still to the that big There think going were now. year to weren’t other that don’t not compared material of I in all the

and I XXXX. really of we've think coming out pretty ramp of XXXX and into the we hit to to it's then more ramps see in been sizeable that XXXX clear expectations terms more expect

as aspect higher expected the product. be of of we expect ARPU's So, kind said to way, is by both also it to it the from above of speed in -- would see what ARPU's you it's with sort in-line a are other more

Greg Burns

Great, you. thank

Matthew Desch

you. Thank

Operator

next Please ahead. question Hamed comes BWS go Khorsand Our with from Financial.

Hamed Khorsand

Hi, morning. good

off expecting stabilize first the side, decline. ARPU the to So soon? anytime to that Are continues on IOT you

Thomas Fitzpatrick

the see long is sloppy a said downward for ARPU we’ve we that the that No, line. time

at ads, are services. If net personal heavily you the look subscriber communication they

that that kind profitable a overall we the that love product because a mass So very is, the us all. ARPU business bit of don't at fact for use causes much they we very, so business to is all that's $X decline that at it consumer and sub ARPU mind think business. very and an the It's network scale we don't great it's that and

Matthew Desch

thing more is, we speed that our the service year, that that services narrow-band, IoT product add some turn be only will get into have so next around customers The eventually of as to we told starting and following love Iridium as year that more number therefore by us they'll overwhelmed have data personal constantly that of they be and have requirements. about applications requirements communication would just devices mass I ARPU sort our network. higher But, of think that a

incremental line dollar I So ARPU that's important why every what the bottom it's regardless falls is. going to but don't be to around, hard to kind of since ARPU really turn its see of that

Hamed Khorsand

line, you. the there prior this commercial subscribers a holding increase the last you Was And more year voice is not drop implemented that revenue data to low just of subscription significant year? the point pricing as a off Is it for their QX just purely a on quarter? for seasonally being during because

Matthew Desch

of the the saying we you're that. seeing effect first in implemented price the No of so last increase benefit April quarter year the is

Hamed Khorsand

expected. with sort as but process I has it lastly, hasn't then government the on obviously time there I of what it's said have extension you contract? far And know guys sticking point renewed as the been mean, some

for guys to been upon? able was they're that asking you there, So agree haven't something there

Matthew Desch

I didn't and come the and get XXXX took last we again minute No, I that. wouldn't the over it to say in to to the obviously haven't last mean agreement took yet. It line. minute

it think, that specific requires don't So, XX to I see, anything conclude days we to. everything it next would I should finalize would deal. just I the the say based But us are pretty here but confident point both on that we in

Thomas Fitzpatrick

existing I than contract. only last be add a expect would The contract of we're quite the thing Matt year be all the to five-year in what the is, revenues of years confident will we higher that

Hamed Khorsand

Thank you.

Operator

question comes with Bank. Please next ahead. Deutsche Our Anthony from go Klarman

Anthony Klarman

run Tom, use questions, towards of at barometer two realize wondering you in we able a hit previously eight that in guided few down growth around the leading exit other leading service can to of revenue the Few correlation a some a quarter have I to as from revenue being ramp million quarter and equipment rate. or in MRR in that reasons. is we'll see you're thanks. there that revenue indicator the a Certus broadband equipment two be for going XXXX? equipment to if words expecting revenue between look years million you as that as XXXX exit guys Hi and guess, revenue and timing progress I'm a make to I that future a periods future you $XXX In future million the and to But

Thomas Fitzpatrick

for revenues the barometer equipment. Equipment service. Remember are No. not a partners our are selling

uncharacteristically atypical. in equipment The that's and XXXX. in driver revenues is margin our was our strong So that handset

XXXX we and the If you you called unusual it that and and just XXXX, look in it three-year there's attention was turning to the shows we Investor were to by it. if it's your we enjoy called at our the down strength, trend trend commentary handset look number in because we as happy what that -- Day a would the in at XXXX we surprised and but out were the our was page call I expected

So that question. answers your

Anthony Klarman

is side plan I the more to rolled as there place broadly? a that out there a sort handset for side have, is And guess is availability of on Certus on that

Matthew Desch

really would handset and a We the plan some side, sort dollars. or to are to a into do what Tom said but that communication back of fraction make modems Yes, sell of of have to -- we opposed on the said personal marketplace sell that some will to the couple those devices that you we other them transceivers But certainly narrowband enable as XXXX first is or of number Certus device And said, what as terminals. mobile expecting There pictures the positive is do there. a hotspot said, devices. out going because that call of are open really will of cost as sending them to land I of of we some have ARPUs business. the to of and of be want as to data today voice sell get aviation will generate IoT next-generation so maritime, higher what a Certus etcetera well that I that business a and low than they're the wide that could and thousand terminals those we today a equipment and thing that sort a sort successful attractive as business port existing we I'm terminal manufacturers video res in I ourselves that them variety

sort actual So a some that's as to going in modem we drop of see to going transition open but to increase a Certus in terminals service revenue. even you're from devices port actually revenue,

good a we always that's trade-off So make. will

Anthony Klarman

the which CapEx shift The from questions, is outside statement service reported. cash I just of revenue. Couple the of you that an other in wondering flow of understood. Right, of on purchases clean-up period was? was as million equipment what really this XX investments have to item there's

Matthew Desch

made a small in We partner. it investment

Anthony Klarman

one in your and particular? businesses related Got is it it of to

Matthew Desch

Yes.

Anthony Klarman

In respect cash, made Q on payments is still of the some happen then, million on that with you the there to sort mentioned that in the full are made that it XQ? you about the payments over And course that mentions finalize other quantum the you've spend that just April payments or NEXT. $XX of you SpaceX, got of XX final to to in

Matthew Desch

Yes.

of the know I in We looks, quarters XX So, look don't and the of and XQ fourth clean. to third is then it should then going spillover to XX and NEXT have area be in on sort at as million-ish rate you the see the third look the quarter. you fourth to that CapEx XX able down should Qs of and and that run on be

Second is to going NEXT quarter residual little have in a it.

Anthony Klarman

then, cash think about you how about think you as And kind capital liquidity forward. on a this think you just this going as question structure of Tom and

call got, today. You've of it XXX cash million

million. XX some make payments of the area got one-off You've to in

business want become DSRA When generating cash then get supports by the facilitate your that You the flow? you unrestricted and what have are, the then the of used ultimate or to free the levered BPI cash the business significant does the minimum cash will a levels you have would which refinancing, facility given to do XXX about does in how pretty be think you refinancing recurring would million. DSRA also

Thomas Fitzpatrick

additional probably But DSRA and that's and in to feels the as area we we in the hundred right we the a become, funds right we the in us, a take cash source use balance, have Yes, hundred of a would it of BPI then just a and facility cushion. re-fi. think cash, feels for as of revolver to put about cash as once kind that regular facility us. as we in the And far a terms of

Anthony Klarman

Thank you.

Matthew Desch

By don't there to back, Andrew, the just I want way be any go to confusion. I want

business. potential to We wanted satellite that see really asked suppress that value one on mentioned performed and long in way you're we you Investor that made Day investment. there technology we investment time that some not confused and really mentioned, into other of Telus announced unique we an business. term Tom was any made the location which not can't in a that it our that in is investment or was and a It's just is we partner think partners. so be You about any that lot We

thought we that make, prudent it So, discussed was Investor we at to but Day.

Anthony Klarman

an And was stake equity that you that took? Matt

Matthew Desch

yes, and of with of part real their government that That's them applications. of some into sort lots allows in and spoofing timing applications protection of and their anti-GPS an efforts, to It others sales bring ability to and that business and the different owner sort kind potential has time both number jamming right. so expand think commercial IoT and in was we of type and equity to which this we're a stake

technology So, prudent of sort bit thought was and an our small a it's of we it exciting cash. of use a

Anthony Klarman

Thank you.

Operator

question from go Robilliard Please ahead. from Barclays. Mathieu Our comes next

Mathieu Robilliard

morning. good please. questions I two All had Yes,

the or on accounting Thank if there? goods does of still Investor is IRO made product, question wondering regarding just Day the at was First of some year I it of cost quarter? it the seasonality increased an sold, are second, looking timing product? your searches you you. And where you to comments in terms with on on be track this more your the anything launch that there of at year

Matthew Desch

product Yes you did Mathieu, I'm Aero. sorry you Certus, say? said which our

Mathieu Robilliard

yes. aviation aero, the For yes, for segment,

Matthew Desch

go There terminals regulatory of mean to just things in partners our on the time. anything have to more more terminals I lot now. are all thing their a are Yes. sort that terms and and have complexities size that to that put of the take developing importantly right that commercial more, that the through there's to some of aircrafts

So, it core really that the does have. we platform use

more informed of are partner or our that's number they've of that this on and do be So but available. there base to and that later availability will modems to There's it's timeline. being be of out in type the a the getting but aircraft of developed, terminals in satellites trials a us of not kind XXXX the kind anything on them it's more in would the year those marketplace and

Thomas Fitzpatrick

in relates which increase goods And The increase is to then, the sold. the of revenues, engineering directly and the support cost question on episodic. in

of like from in episodic it's So with cost directly and goods increase relates seven five sold in I to It's see that revenues. revenue it. moves stepped-up revenues and nature the said three the you in increase the to cost six the

Mathieu Robilliard

Thank you.

Operator

Chris our And go Please Quilty question Instructions] comes [Operator Quilty with next from Analytics. ahead.

Chris Quilty

be Inmarsat took us to to when follow Can clearance. you an you that achieve of that a Matt, for services? question. up just example that two aero achieve year safety or them give wanted on to I think able idea you'll know

Matthew Desch

expected. the Yes. other want time it the get product It that service after does and see the in extensive take sort bodies FAA demonstrate of the in to air regulatory because you to market, time performs as

field. It product that a we that require services start exercise. safety it is the process, not does it's go process but later as understood completely really this just in paper we're get until going to In the It's regulatory through in whole involved said we'll doesn't and really today. So Certus that year.

meantime, of expect Certus takes. a In tiny longer sort available So upon just year the services after have bit of maybe to do at I we see until that it wouldn't length least safety course, a just who and on the time today. knows of safety depending services

the services there. it's attractive out getting widely. most It's think safety I continued deployed, quite product

have so put are Our to of single with narrowband possibly Certus be might potentially our terminals and of services some attractive to cabins the be It put into communications does partners integrated than sort communications, service that package. a that's long-term can safety provide they're services they going in it. initial cockpit an But happy obviously, the is benefit quite that well. as both just safety

Chris Quilty

that a EMSS do Certus negotiations assuming and include not is and that I'm in parallel existing if the the any those related of Great services place? contract after on having is EMSS on and or clarification is that the those discussions in are not currently starts services something you sort update contract

Matthew Desch

that to been, is is Certus. The it's infrastructure exact Certus right. much will the the of last the the five-year price what not services sort you're the know government of pretty has to really same likely Certus. not for that include They sense narrowband It's does the contract. in had implement be. in the most Certus part the deploying scope, you So we It but negotiate

through technology of happens that actually broadband right COMSAT the already have really a today very Certus great connected the using either network to the performance the they're be has from or government. to selling with happy selected it deployed gateway know get gateway now, some that in partner, have they pricing government the and be our to experience is and We costs they our us they already. but negotiated negotiating the has to The who and government of COMSAT. instead commercial will deploying It through DoD

a it activity independent to of is own its it So trajectory. the have EMSS really will completely sort and contract

Chris Quilty

the base device you the customer going you’re was were or offering? that way of Gap] the to market, the due [Audio nature to

Matthew Desch

PTT A things. It primary, while its say, our well device was PTT would very our little little I wasn't a loud phone augment our that product Iridium bit been three the PTT for own. a a something having consumer speaker extreme works you be service device. purpose-built customers. to It or bit. according of type which to those on for primary up industrial really our a example, needed has It wasn't all ground

and sort of industrial product that us and consumer very Kinetic and is the it services. services of PTT fact wasn't militaries, market exactly telling of the of have for so was appealing first to NGOs really kind our and devices will really years etcetera. experience And be this while responders come partners purpose-built fine to and enterprise are that ideal it for Icom with from

thing. one that's So

is, kind Icom of that the The has other side. experience thing special mobile global market or safety services on in terrestrial the radio

it's take little can to their a kind relationship and Amazon like well. it's service, So bit to as supply Web of, We equally their IoT Services. but with our customers their exciting customers they're they're bring excited satellite can Iridium to that

always one our So I like. really underpinned sort we're business, little be on a a we're think and I encouraged we data factors still a it's business potential about to but hearing PTT. from couple of area our that going of potential massive growth the part not and think bit what of voice it's It's in

Chris Quilty

very you much. thank Great,

Matthew Desch

Thank you.

Operator

ahead. Louie DiPalma Blair. from comes Please with question William next Our go

Louie DiPalma

and Ken. Tom Matt, morning Good

Matthew Desch

Louie. Hello

Louie DiPalma

Aireon discussed Aireon similar that broadly could year's could to be the to Iridium at able revenue. you have you Analyst Day to timing any I a rate Do on next dividends at accomplish think contribute how the Tom, that? sense

Thomas Fitzpatrick

as XXXX we what dividends than dividends know we be million. greater is revenues later and you that than no we would that, which the eventually Louie $XX expect said So, the are said

Louie DiPalma

beyond And the do on timing you have any sense eventually?

Thomas Fitzpatrick

good the and you're if thinking to mean, ramp. the dividend XXXX just that I depend in in intentionally dividend, for it's material Well, ground investors two put their about stakes on will going decided hosted that we form that and we're that the way enjoy the -- be more the growth dividends profile the in revenues. going of eventually than profile, of growth to is size payload

Louie DiPalma

this to going low of frequent the works in low entrants a to to able new with the there a appears target like Matt, market? Great in that be line IoT possibly that and litany have to of pursuing set the XXXX end updates spectrum. Iridium VHF in are space and over for is Does bandwidth the very regards end ultra to small related product market data be the less the of that market

Matthew Desch

services able sort very they're the are between sense very, of industrial-strength really of can updated you are so development Yes, hours often devices. one latency attractive. being devices them that sort and provide with kind tens last the latency are said for high very those networks. interested don't today we competitive We as we to sort in in the of as that or low being see high They the low-power, very of without years it minutes quality, are, that of information be those very get from of of

So they're would when using but customers to of they mode least together products pretty our one who's said, of those probably and IoT we discussions partner network -- not number typically at But, some some offering our we type maybe one That the customers with of who's the satellites, of potentially their they we've one-way devices our our of have launching the like and gap all them to offering products. bridge our We've eventual well. to actually eventually products products. to able of had products those, two-way fit products dual a sort potential or sort put operators. are their see that for announced help

trial today able I we're and only satellites or offer services of on few progress So very their very, think those vice we're making really keeping really close keeping and to networks versa. still that's an for sort days. early they're being eye a on the with there tabs years the away market. It's There's up

going it's be our activity, So in that of a I we it's development welcome. really an industry but really kind don't think near-term to interesting

Louie DiPalma

Day the or that the that into disclosed you increase that? Great ownership and did at say investment following Telus, $XX million is guys beyond XX% Analyst the it

Thomas Fitzpatrick

right a and have We number interest the Louie. that's in XX% Telus,

Louie DiPalma

guys. Thanks

Matthew Desch

Louie. Thanks

Operator

is next ahead. Please with from Prentiss James. Raymond Ric follow-up Our go question a

Ric Prentiss

Hey follow-up. guys, appreciate for the opportunity

CapEx or final of million CapEx Is was number the Anthony's the XX with expect millions of in the Just back difference XX you question. million a million. million? difference CapEx quarter of the but to there circle was the to out XX-XX question, what mentioned Tom, what second XX maintenance XX you then want to between XX the to

Thomas Fitzpatrick

the XX-ish that will the XX quarter and number think full NEXT aggregate I second year. So, million, XX capital the NEXT on in million the is capital

Ric Prentiss

Full year.

as beyond you far As XQ mean?

Thomas Fitzpatrick

about XX another probably is will then the area expectation we're the They XX second in first and quarter. of Yes. done. around in in the They'll be our

Ric Prentiss

was Matt comp of sense. comps, that structured honey expecting at at area we you high and as the we obviously over guys the mountain then, stock a land years? should it as And milk far climbed in based it share talked Day couple that okay stock How Investor about other as makes pop and based have quarter you, comps based of really the you some be as but or Got the next point. look should is one

Matthew Desch

am do but not sure. comp. really like based I because expenses for really stock -- international its do have that's Tom, you We the know more in our a partners, program like

Thomas Fitzpatrick

Yes. cash. That's

Ric Prentiss

as for afterwards in So is that little based You that look that can kind -- XXXX into me higher be just? to about should out we future X.X share XQ million as we we of get level back compensations a the maybe saw thinking

Matthew Desch

back. get let's Yes

in area with Ric. the double but on that that's think let's I X.X, back you

Ric Prentiss

Day on leverage you in kind Analyst report you Do it future? prepared obviously the referenced All to remarks expect right, that expect, as your that cash into and the do you you're free Was flow. focusing guys of well.

reported in we something the at future? should looking that be is So being

Thomas Fitzpatrick

but our Day. sure discussed, Investor we I'm be the out pretty not about in laid reported methodology clearly It'll but

track. easier it'd to So be

Matthew Desch

to we of a many the of described unique and sort or of representing computable that that don't little a periodically on going Iridium want someone but obviously others what exactly certainly we There's talk sort attribute bit a or it's we regular all of see how, whether have, way do people best basis it's it about of ourselves but think about. obviously that on positioning because we

Thomas Fitzpatrick

double We just a XXXX me share Let with and the XXXX. for comp. expectation back XXXX based you good that's on ran and

Ric Prentiss

beyond reason and capital talked an just Day it story you holiday are the at I companies moving guys sense you the makes that That is, lot and about up Analyst a helps. free power other EBITDA flow Matt, of obviously cash bring stories.

trying stock we value think flow about where that valuation could of and is to of it just leverage to of and go think kind free think cash So the how the the I think company? as important

Matthew Desch

been good of seem to is a since Investor we've getting have that traction quite sort a be people we talking And that from and appreciate that to that Day obviously the about some of attribute bit talked unique us.

appreciate So I the question.

Ric Prentiss

margin hope EBITDA in about there ground the How years me. to get that for one along at milestones should like, I kind the trends? of guidance, mentioned to good you you're times Last bottom couple path, Margin the in Where line. well Aireon progression, a hell we about call through couple think lot guys there's flow a EBITDA XX, a ago should revenues you way are and of we have think the the of margin we could stakes with think dividend? where that head like today did any that overtime was

Thomas Fitzpatrick

cost. where equipment are year satellite so expand is XX%- opposed it's revenues XX% operating business were years last equipment to The like overtime. leverage what but to of we this which less and it's happened just, kind be margin flat is Ric. Sure, very as heavy and cause excellent variable mature it's margins service companies business, XX% to could There in much have that going

where XX%. towards we a moving we progression are today So, logical see from

Ric Prentiss

the Great, thanks follow-ups. for lot a

Matthew Desch

Thanks.

Operator

like conference our And the closing to the this I'd back session. concludes question-and-answer remarks. to over any turn company for

Kenneth Levy

quarter good look is forward weeks which another our quarter to that was in about Satellite next seeing DC. XXXX, at you and It in Thanks. here all call on I and two some of think perhaps you

there. you see we'll So

Operator

Thank is you today's attending concluded. conference now The presentation. for

You may now disconnect.

Iridium Communications (IRDM) 23 Apr 192019 Q1 Earnings call transcript