ORBCOMM Announces Third Quarter 2016 Results
– Total Revenues of $46.3 Million Up Slightly to Prior Year –
– Service Revenues Growing 15% Over Prior Year –
– Adjusted EBITDA of $12.0 Million, Increases 8.5% Over Prior Year –
– Company Adds 37,000 Net Subscriber Communicators in the Quarter –
Rochelle Park, NJ,
November 2, 2016 -
ORBCOMM Inc. (NASDAQ: ORBC), a global provider of Machine-to-Machine (M2M) and Internet of Things (IoT) solutions, today announced financial results for the third quarter ended September 30, 2016.
The following financial highlights are in thousands of dollars.
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Quarter Ended September 30,
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Nine Months Ended September 30,
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2016
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2015
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2016
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2015
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Service Revenues
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$
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28,846
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$
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25,048
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$
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83,454
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$
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72,833
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Product Sales
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$
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17,442
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$
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21,036
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$
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56,458
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$
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60,464
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Total Revenues
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$
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46,288
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$
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46,084
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$
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139,912
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$
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133,297
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Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders
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($14,048
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$
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1,582
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($20,313
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($13,517
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Net Income (Loss) – Ex-Items, attributable to ORBCOMM Inc. Common
Stockholders (1,5)
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($3,122
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$
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2,082
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($8,454
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$
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3,292
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Basic EPS
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($0.20
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$
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0.02
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($0.29
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($0.19
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Basic EPS – Ex-Items (2,5)
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($0.04
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$
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0.03
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($0.12
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$
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0.05
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EBITDA (3,5)
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($521
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$
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9,385
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$
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18,063
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$
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9,908
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Adjusted EBITDA (4,5)
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$
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11,961
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$
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11,029
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$
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34,776
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$
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30,411
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(1) Net Income (Loss) – Ex-Items, attributable to ORBCOMM Inc. Common
Stockholders is defined as Net Income (Loss) attributable to ORBCOMM
Inc. Common Stockholders, excluding Impairment Loss-satellite network,
and Acquisition-related and integration costs.
(2) Basic EPS – Ex-Items is defined as Basic EPS excluding Impairment
Loss-satellite network, and Acquisition-related and integration costs.
(3) EBITDA is defined as earnings attributable to ORBCOMM Inc. before
interest income (expense), loss on debt extinguishment, provision for
income taxes and depreciation and amortization.
(4) Adjusted EBITDA is defined as EBITDA, adjusted for stock-based
compensation expense, noncontrolling interests, impairment loss,
non-capitalized satellite launch and in-orbit insurance, insurance
recovery, and acquisition-related and integration costs.
(5) A table presenting Net Income (Loss) – Ex-Items, attributable to
ORBCOMM Inc. Common Stockholders, EBITDA and Adjusted EBITDA, reconciled
to GAAP Net Income and Basic EPS – Ex-Items reconciled to GAAP Basic
EPS, is among other financial tables at the end of this release.
“In the third quarter, we had mixed results. Service Revenues grew about
4% sequentially marking our largest organic increase to date, while
Product Sales came in lower than anticipated due to logistical and
timing issues,” said Marc Eisenberg, ORBCOMM’s Chief Executive Officer.
“We expect to catch-up over the next couple of quarters and add multiple
new projects to the mix.”
“Adjusted EBITDA margins improved to about 26% for the third quarter
this year demonstrating the operating leverage from improved Service
Revenues,” said Robert Costantini, Chief Financial Officer of ORBCOMM.
“Cash flows from operations increased by over $11 million in Q3 to over
$19 million for the first nine months of 2016.”
Recent Highlights:
Financial Highlights
-
For Q3 of 2016, Total Revenues of $46.3 million were up slightly
year-over-year. Service Revenues increased 15% over the prior year
period to $28.8 million. Product Sales of $17.4 million were ($3.6)
million or 17% lower than the prior year period. The shortfall in
Product Sales was caused by a number of factors, including shifting
manufacturing of multiple product lines to a new contract
manufacturer, delays in new program releases from distribution
partners, and delays in the completion of engineering tasks needed to
deliver customers updated products. We believe we will ship these
products over the next couple of quarters.
-
For Q3 of 2016, Adjusted EBITDA was $12.0 million, 25.8% of Total
Revenues, and increased $0.9 million or 8.5% over the prior year
period.
-
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders was
($14.0) million Net Loss for the third quarter of 2016, compared to
Net Income of $1.6 million for the same period in 2015, lower largely
due to an Impairment Loss of ($10.7) million related to an in-orbit
OG2 satellite that lost communication (see Impairment
Loss-satellite network below).
-
Net subscriber communicator additions for ORBCOMM were 37,000 in Q3 of
2016, taking the total billable subscriber communicators to 1,687,000
at September 30, 2016, which compares to 1,330,000 at the end of the
same period last year; a 27% increase year-over-year.
Customer Highlights
-
On September 19, 2016, we announced that ORBCOMM has been selected by Global
Fishing Watch to provide extensive global satellite Automatic
Identification System (AIS) data from commercial fishing vessels
for its new online technology platform. Global Fishing Watch is a
collaboration by Oceana, Google and SkyTruth to end Illegal,
Unreported and Unregulated (IUU) fishing by identifying fishing
vessels and analyzing fishing activity to ensure environmental
regulations are upheld. ORBCOMM provides Global Fishing Watch with
more than 20 million AIS data points every day that show the movement
of the world’s largest commercial vessels over time.
-
On August 25, 2016, we announced that ORBCOMM has been selected by
L.J. Rogers Trucking, Inc. (L.J. Rogers) to provide an industry-leading
asset tracking solution for its dry van trailer fleet.
Headquartered in Mebane, NC, L.J. Rogers focuses on full-service
truckload transportation and logistics support throughout the United
States. ORBCOMM’s end-to-end solution will provide wireless
connectivity through its proprietary hardware and a web-based
reporting platform for optimal fleet
management. L.J. Rogers expects to complete deployment of
ORBCOMM’s solution by the second quarter of 2017.
-
On August 11, 2016, we announced that ORBCOMM was selected by Northern
Refrigerated Transportation, Inc. (Northern Refrigerated) to provide
industry-leading telematics solutions for its fleet of refrigerated
trailers. Based in Turlock, CA, Northern Refrigerated is a leader in
Less Than Truckload (LTL) West Coast refrigerated transport solutions.
Northern Refrigerated is using ORBCOMM’s cold chain telematics systems
to track, monitor and control its refrigerated trailers. Northern
Refrigerated will complete deployment of ORBCOMM’s cold chain solution
by the end of 2016.
-
On August 4, 2016, Carrier Transicold announced it will offer a
customized telematics solution that will deliver advanced capabilities
for its transport refrigeration units (TRUs). The new telematics
solution will help fleets manage their refrigerated assets by enabling
remote refrigeration unit monitoring, control and diagnostics, data
management and other value-added capabilities. ORBCOMM Inc., was
selected to develop the system according to design and qualification
requirements specified by Carrier Transicold. With field trials
nearing completion, Carrier Transicold anticipates the full release of
its telematics solution in North America in 2017, followed by rollouts
in Europe and other regions around the world.
Product Highlights
-
On September 27, 2016, we announced that ORBCOMM has been named a
winner of two IoT Evolution Asset Tracking Awards for ORBCOMM’s CargoWatch®
Secure web application and its Cold
Chain Telematics Solution by IoT Evolution magazine and IoT
Evolution World, leading print and online voices of the
high-growth IoT marketplace.
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On September 21, 2016, we announced that ORBCOMM has enhanced its cold
chain compliance solution for the European refrigerated
transportation market. In addition to industry-leading temperature
recorders, sensors and the ColdChainView
web application, ORBCOMM’s comprehensive solution now includes
connectivity services from some of the largest providers of
terrestrial services in Europe as well as a new mobile app. By
enabling precise temperature monitoring, fuel management, preventive
maintenance and remote control for food, pharmaceuticals and other
temperature-controlled cargo, ORBCOMM helps customers improve
end-to-end operations and gain total assurance from the product’s
origin to destination.
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On September 20, 2016, we announced that ORBCOMM has received the Good
Automated Manufacturing Practice (GAMP® 5) official certification of
approval from the European Institute for Pharma Logistics (EIPL) for
its Euroscan-branded product line of temperature
recording devices and cold
chain monitoring systems. GAMP 5 guidelines are published by the
International Society for Pharmaceutical Engineering (ISPE) and
provide a flexible, risk-based approach on how to define and implement
quality procedures, including compliant computerized systems, that
support Good Distribution Practices (GDP) of pharmaceutical products
for human use.
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On September 7, 2016, we introduced our Enterprise IoT Toolkit, which
provides every layer of the IoT stack required to develop
market-specific solutions that improve asset utilization, reduce
operational costs and provide long-term return on investment (ROI).
ORBCOMM’s IoT Toolkit components are available together or separately
to enterprises, Original Equipment Manufacturers (OEMs), solution
providers and Value Added Resellers (VARs) to create M2M and IoT
solutions with the assurance that all of the building blocks are
interoperable and come with a single point of contact for support.
ORBCOMM’s IoT
Toolkit is a finalist in the CTIA Super Mobility 2016 E-Tech
Awards in both the Industrial IoT (IIoT, M2M, Sensors, RFID, NFC etc.)
and Mobile Cloud categories.
-
On August 16, 2016, we announced that ORBCOMM was named a winner of
two IoT Evolution Product of the Year Awards for the ORBCOMM PT
7000 and the ORBCOMMconnect
multi-network management portal by IoT
Evolution magazine and IoT
Evolution World, the leading magazine and Web site covering IoT
technologies. The winners were published in the following issue of IoT
Evolution magazine.
Financial Results and Highlights
Revenues
For the third quarter ended September 30, 2016, Service Revenues were up
15% over the prior year period to $28.8 million. The increase in Service
Revenues in Q3 this year was driven by both organic growth and our most
recent acquisitions. Organic growth benefited from the OG2 satellite
constellation and a growing subscriber base across multiple lines of
business.
Product Sales during the third quarter of 2016 were $17.4 million
compared to $21.0 million during the same period last year, decreasing
$3.6 million or 17%. Products sales were hampered by timing and
logistical issues that impacted transportation solutions, along with
continued headwinds in South America. Product Sales were up in European
markets in Q3 over last year.
Total Revenues for the third quarter ended September 30, 2016 were
slightly up at $46.3 million compared to $46.1 million during the same
period of 2015.
Cost of Revenues and Operating Expenses
Total Cost of Revenues and Operating Expenses for the third quarter of
2016 were $58.3 million compared to $42.9 million during the same period
in 2015. Cost of Revenues, exclusive of Depreciation and Amortization,
decreased slightly year-over-year largely due to lower Cost of Products
sold, partially offset by increases in costs to operate the companies
acquired. Operating Expenses were higher this year than the prior year
period primarily due to higher Depreciation and Amortization, Product
Development and non-labor related SG&A expenses as well as an Impairment
Loss of ($10.7) million related to an in-orbit OG2 satellite that lost
communication.
Impairment Loss-satellite network
In August 2016, the Company lost communication with one of the in-orbit
OG2 satellites launched in July 2014. While we are still trying to
recover the satellite, due to the extended period without communication
we are recording an impairment charge of $10.7 million to write-off the
net book value of this satellite as of September 30, 2016. The loss of
this one satellite is not expected to have a material impact on network
communications services or our financials going forward. The Company
believes the loss of communication is likely a workmanship or piece part
issue, specific to this one satellite. Under the terms of our in-orbit
insurance for the satellites launched in July 2014, which was extended
through December 21, 2016, we expect this satellite to be the one
satellite deductible across the five satellites covered under this
in-orbit policy.
Income (Loss) Before Income Taxes, Net Income (Loss), and Earnings
Per Share
Income (Loss) Before Income Taxes for the third quarter of 2016 was a
($14.0) million loss, compared to the $1.9 million profit for the third
quarter of 2015.
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders was
($14.0) million Net Loss for the third quarter of 2016, compared to Net
Income of $1.6 million for the same period in 2015. Basic EPS was a loss
of ($0.20) per share for the third quarter of 2016 versus a profit of
$0.02 per share for the third quarter of 2015. The Net Income (Loss)
attributable to ORBCOMM Inc. Common Stockholders includes an Impairment
Loss of ($10.7) million related to an in-orbit OG2 satellite that lost
communication.
Net Income (Loss) – Ex-Items, attributable to ORBCOMM Inc. Common
Stockholders and Basic EPS – Ex-Items are non-GAAP financial measures
used by the Company. Please see the financial tables at the end of the
release for a reconciliation of Net Income (Loss) – Ex-Items,
attributable to ORBCOMM Inc. Common Stockholders and Basic EPS –
Ex-Items.
EBITDA and Adjusted EBITDA
EBITDA for the third quarter of 2016 was ($0.5) million compared to $9.4
million in the third quarter of 2015.
Adjusted EBITDA was $12.0 million for the third quarter of 2016 compared
to $11.0 million in the third quarter of 2015, an increase of 8.5%.
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the
Company to measure operating performance and the quality of earnings.
Please see the financial tables at the end of the release for a
reconciliation of EBITDA and Adjusted EBITDA.
Balance Sheet & Cash Flow
At September 30, 2016, Cash and Cash Equivalents totaled $21.3 million,
compared to $28.1 million at December 31, 2015 that included $1.0
million in Restricted Cash, decreasing ($6.8) million. The Cash decline
was partially offset by the $19.2 million of Cash generated by
operations through the first nine months of 2016. Cash invested in
Capital Expenditures was ($22.5) million, of which ($8.3) million was
due to the completion of milestone and insurance payments for the OG2
program related to the final launch in late 2015 and includes ($1.6)
million of capitalized interest. In addition, we paid ($3.8) million for
the Skygistics acquisition in the second quarter of 2016.
Guidance
For the Full Year 2016, the Company now expects Total Revenues to range
between $188 million and $191 million and Adjusted EBITDA at about 25%
margins to Total Revenues.
Investment Community Conference Call
ORBCOMM will host a conference call and webcast for the investment
community this morning at 8:30 AM ET. Senior management will review the
results, discuss ORBCOMM’s business, and address questions. To access
the call, domestic participants should dial 1-888-401-4642 at least ten
minutes prior to the start of the call. International callers should
dial 1-719-785-9446. To hear a live web simulcast or to listen to the
archived webcast following completion of the call, please visit the
Company’s website at http://investors.orbcomm.com
and then select “News & Events” to access the link to the call. To
listen to a replay of the conference call, please visit
https://event.mymeetingroom.com/Public/WebRegistration/Y29uZmVyZW5jZUlkPTg4OTY5MDEmdHlwZT1yZXBsYXkmbGFuZ3VhZ2U9ZW5nbGlzaA==.
The replay will be available from approximately 1:30 PM ET on November
2, 2016, through 1:30 PM ET on November 16, 2016.
About ORBCOMM Inc.
ORBCOMM Inc. (Nasdaq: ORBC) is a leading global provider of
Machine-to-Machine (M2M) communication solutions and the only commercial
satellite network dedicated to M2M. ORBCOMM’s unique combination of
global satellite, cellular and dual-mode network connectivity, hardware,
web reporting applications and software is the M2M industry’s most
complete service offering. Our solutions are designed to remotely track,
monitor, and control fixed and mobile assets in core vertical markets
including transportation & distribution, heavy equipment, industrial
fixed assets, oil & gas, maritime, mining and government.
With close to two decades of innovation and expertise in M2M, ORBCOMM
has more than 1.6 million subscribers with a diverse customer base
including premier OEMs such as Caterpillar Inc., Doosan Infracore
America, Hitachi Construction Machinery Co., Ltd., John Deere, Komatsu
Ltd., and Volvo Construction Equipment, as well as end-to-end solutions
customers such as C&S Wholesale, Canadian National Railways, CR England,
Hub Group, KLLM Transport Services, Marten Transport, Swift
Transportation, Target, Tropicana, Tyson Foods, Walmart, Union Pacific
Railroad and Werner Enterprises. 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, estimates, objectives and expectations
for future events and other statements that are not historical facts.
Such forward-looking statements, including those concerning the
Company’s expectations and estimates, 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: dependence of SkyWave’s business on its commercial
relationship with Inmarsat plc and the services provided by Inmarsat
plc, including the continued availability of Inmarsat plc’s satellites;
substantial losses we have incurred and may continue to incur; demand
for and market acceptance of our products and services and the
applications developed by us and our resellers; market acceptance and
success of our Automatic Identification System business; dependence on a
few significant customers, including a concentration in Brazil, loss or
decline or slowdown in the growth in business from key customers, such
as Caterpillar Inc., Hitachi Construction Machinery Co., Ltd., Komatsu
Ltd., Onixsat, Satlink S.L., Sascar and Maersk Lines, other value-added
resellers, or VARs, and international value-added resellers, or IVARs,
and other value-added Solution Providers, or SPs; dependence on a few
significant vendors or suppliers, loss or disruption or slowdown in the
supply of products and services from key vendors, such as Inmarsat plc.
and Sanmina Corporation; loss or decline or slowdown in growth in
business of any of the specific industry sectors we serve, such as
transportation, heavy equipment, fixed assets and maritime; our
potential future need for additional capital to execute on our growth
strategy; additional debt service acquired with or incurred in
connection with existing or future business operations; our acquisitions
may expose us to additional risks, such as unexpected costs, contingent
or other liabilities, or weaknesses in internal controls, and expose us
to issues related to non-compliance with domestic and foreign laws,
particularly regarding our acquisitions of businesses domiciled in
foreign countries; the terms of our credit agreement, under which we
currently have borrowed $150 million and may borrow up to an additional
$10 million, could restrict our business activities or our ability to
execute our strategic objectives or adversely affect our financial
performance; the inability to effect suitable investments, alliances and
acquisitions or the failure to integrate and effectively operate the
acquired businesses; fluctuations in foreign currency exchange rates;
the inability of our subsidiaries, international resellers and licensees
to develop markets outside the United States; the inability to obtain or
maintain the necessary regulatory authorizations, approvals or licenses,
including those that must be obtained and maintained by third parties,
for particular countries or to operate our satellites; technological
changes, pricing pressures and other competitive factors; in-orbit
satellite failures or reduced performance of our existing satellites;
the failure of our system or reductions in levels of service due to
technological malfunctions or deficiencies or other events; significant
liabilities created by products we sell; litigation proceedings;
inability to operate due to changes or restrictions in the political,
legal, regulatory, government, administrative and economic conditions
and developments in the United States and other countries and
territories in which we provide our services; ongoing global economic
instability and uncertainty; and changes in our business strategy. In
addition, specific consideration should be given to various factors
described in Part I, Item 1A. “Risk Factors” and Part II, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations”, and elsewhere in our Annual Report on Form 10-K for the
year ended December 31, 2015, and other documents, on file with the
Securities and Exchange Commission. The Company undertakes no obligation
to publicly revise any forward-looking statements or cautionary factors,
except as required by law.
“In the third quarter, we had mixed results. Service Revenues grew about
4% sequentially marking our largest organic increase to date, while
Product Sales came in lower than anticipated due to logistical and
timing issues,” said Marc Eisenberg, ORBCOMM’s Chief Executive Officer.
“We expect to catch-up over the next couple of quarters and add multiple
new projects to the mix.”
“Adjusted EBITDA margins improved to about 26% for the third quarter
this year demonstrating the operating leverage from improved Service
Revenues,” said Robert Costantini, Chief Financial Officer of ORBCOMM.
“Cash flows from operations increased by over $11 million in Q3 to over
$19 million for the first nine months of 2016.”
Recent Highlights:
Financial Highlights
-
For Q3 of 2016, Total Revenues of $46.3 million were up slightly
year-over-year. Service Revenues increased 15% over the prior year
period to $28.8 million. Product Sales of $17.4 million were ($3.6)
million or 17% lower than the prior year period. The shortfall in
Product Sales was caused by a number of factors, including shifting
manufacturing of multiple product lines to a new contract
manufacturer, delays in new program releases from distribution
partners, and delays in the completion of engineering tasks needed to
deliver customers updated products. We believe we will ship these
products over the next couple of quarters.
-
For Q3 of 2016, Adjusted EBITDA was $12.0 million, 25.8% of Total
Revenues, and increased $0.9 million or 8.5% over the prior year
period.
-
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders was
($14.0) million Net Loss for the third quarter of 2016, compared to
Net Income of $1.6 million for the same period in 2015, lower largely
due to an Impairment Loss of ($10.7) million related to an in-orbit
OG2 satellite that lost communication (see Impairment
Loss-satellite network below).
-
Net subscriber communicator additions for ORBCOMM were 37,000 in Q3 of
2016, taking the total billable subscriber communicators to 1,687,000
at September 30, 2016, which compares to 1,330,000 at the end of the
same period last year; a 27% increase year-over-year.
Customer Highlights
-
On September 19, 2016, we announced that ORBCOMM has been selected by Global
Fishing Watch to provide extensive global satellite Automatic
Identification System (AIS) data from commercial fishing vessels
for its new online technology platform. Global Fishing Watch is a
collaboration by Oceana, Google and SkyTruth to end Illegal,
Unreported and Unregulated (IUU) fishing by identifying fishing
vessels and analyzing fishing activity to ensure environmental
regulations are upheld. ORBCOMM provides Global Fishing Watch with
more than 20 million AIS data points every day that show the movement
of the world’s largest commercial vessels over time.
-
On August 25, 2016, we announced that ORBCOMM has been selected by
L.J. Rogers Trucking, Inc. (L.J. Rogers) to provide an industry-leading
asset tracking solution for its dry van trailer fleet.
Headquartered in Mebane, NC, L.J. Rogers focuses on full-service
truckload transportation and logistics support throughout the United
States. ORBCOMM’s end-to-end solution will provide wireless
connectivity through its proprietary hardware and a web-based
reporting platform for optimal fleet
management. L.J. Rogers expects to complete deployment of
ORBCOMM’s solution by the second quarter of 2017.
-
On August 11, 2016, we announced that ORBCOMM was selected by Northern
Refrigerated Transportation, Inc. (Northern Refrigerated) to provide
industry-leading telematics solutions for its fleet of refrigerated
trailers. Based in Turlock, CA, Northern Refrigerated is a leader in
Less Than Truckload (LTL) West Coast refrigerated transport solutions.
Northern Refrigerated is using ORBCOMM’s cold chain telematics systems
to track, monitor and control its refrigerated trailers. Northern
Refrigerated will complete deployment of ORBCOMM’s cold chain solution
by the end of 2016.
-
On August 4, 2016, Carrier Transicold announced it will offer a
customized telematics solution that will deliver advanced capabilities
for its transport refrigeration units (TRUs). The new telematics
solution will help fleets manage their refrigerated assets by enabling
remote refrigeration unit monitoring, control and diagnostics, data
management and other value-added capabilities. ORBCOMM Inc., was
selected to develop the system according to design and qualification
requirements specified by Carrier Transicold. With field trials
nearing completion, Carrier Transicold anticipates the full release of
its telematics solution in North America in 2017, followed by rollouts
in Europe and other regions around the world.
Product Highlights
-
On September 27, 2016, we announced that ORBCOMM has been named a
winner of two IoT Evolution Asset Tracking Awards for ORBCOMM’s CargoWatch®
Secure web application and its Cold
Chain Telematics Solution by IoT Evolution magazine and IoT
Evolution World, leading print and online voices of the
high-growth IoT marketplace.
-
On September 21, 2016, we announced that ORBCOMM has enhanced its cold
chain compliance solution for the European refrigerated
transportation market. In addition to industry-leading temperature
recorders, sensors and the ColdChainView
web application, ORBCOMM’s comprehensive solution now includes
connectivity services from some of the largest providers of
terrestrial services in Europe as well as a new mobile app. By
enabling precise temperature monitoring, fuel management, preventive
maintenance and remote control for food, pharmaceuticals and other
temperature-controlled cargo, ORBCOMM helps customers improve
end-to-end operations and gain total assurance from the product’s
origin to destination.
-
On September 20, 2016, we announced that ORBCOMM has received the Good
Automated Manufacturing Practice (GAMP® 5) official certification of
approval from the European Institute for Pharma Logistics (EIPL) for
its Euroscan-branded product line of temperature
recording devices and cold
chain monitoring systems. GAMP 5 guidelines are published by the
International Society for Pharmaceutical Engineering (ISPE) and
provide a flexible, risk-based approach on how to define and implement
quality procedures, including compliant computerized systems, that
support Good Distribution Practices (GDP) of pharmaceutical products
for human use.
-
On September 7, 2016, we introduced our Enterprise IoT Toolkit, which
provides every layer of the IoT stack required to develop
market-specific solutions that improve asset utilization, reduce
operational costs and provide long-term return on investment (ROI).
ORBCOMM’s IoT Toolkit components are available together or separately
to enterprises, Original Equipment Manufacturers (OEMs), solution
providers and Value Added Resellers (VARs) to create M2M and IoT
solutions with the assurance that all of the building blocks are
interoperable and come with a single point of contact for support.
ORBCOMM’s IoT
Toolkit is a finalist in the CTIA Super Mobility 2016 E-Tech
Awards in both the Industrial IoT (IIoT, M2M, Sensors, RFID, NFC etc.)
and Mobile Cloud categories.
-
On August 16, 2016, we announced that ORBCOMM was named a winner of
two IoT Evolution Product of the Year Awards for the ORBCOMM PT
7000 and the ORBCOMMconnect
multi-network management portal by IoT
Evolution magazine and IoT
Evolution World, the leading magazine and Web site covering IoT
technologies. The winners were published in the following issue of IoT
Evolution magazine.
Financial Results and Highlights
Revenues
For the third quarter ended September 30, 2016, Service Revenues were up
15% over the prior year period to $28.8 million. The increase in Service
Revenues in Q3 this year was driven by both organic growth and our most
recent acquisitions. Organic growth benefited from the OG2 satellite
constellation and a growing subscriber base across multiple lines of
business.
Product Sales during the third quarter of 2016 were $17.4 million
compared to $21.0 million during the same period last year, decreasing
$3.6 million or 17%. Products sales were hampered by timing and
logistical issues that impacted transportation solutions, along with
continued headwinds in South America. Product Sales were up in European
markets in Q3 over last year.
Total Revenues for the third quarter ended September 30, 2016 were
slightly up at $46.3 million compared to $46.1 million during the same
period of 2015.
Cost of Revenues and Operating Expenses
Total Cost of Revenues and Operating Expenses for the third quarter of
2016 were $58.3 million compared to $42.9 million during the same period
in 2015. Cost of Revenues, exclusive of Depreciation and Amortization,
decreased slightly year-over-year largely due to lower Cost of Products
sold, partially offset by increases in costs to operate the companies
acquired. Operating Expenses were higher this year than the prior year
period primarily due to higher Depreciation and Amortization, Product
Development and non-labor related SG&A expenses as well as an Impairment
Loss of ($10.7) million related to an in-orbit OG2 satellite that lost
communication.
Impairment Loss-satellite network
In August 2016, the Company lost communication with one of the in-orbit
OG2 satellites launched in July 2014. While we are still trying to
recover the satellite, due to the extended period without communication
we are recording an impairment charge of $10.7 million to write-off the
net book value of this satellite as of September 30, 2016. The loss of
this one satellite is not expected to have a material impact on network
communications services or our financials going forward. The Company
believes the loss of communication is likely a workmanship or piece part
issue, specific to this one satellite. Under the terms of our in-orbit
insurance for the satellites launched in July 2014, which was extended
through December 21, 2016, we expect this satellite to be the one
satellite deductible across the five satellites covered under this
in-orbit policy.
Income (Loss) Before Income Taxes, Net Income (Loss), and Earnings
Per Share
Income (Loss) Before Income Taxes for the third quarter of 2016 was a
($14.0) million loss, compared to the $1.9 million profit for the third
quarter of 2015.
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders was
($14.0) million Net Loss for the third quarter of 2016, compared to Net
Income of $1.6 million for the same period in 2015. Basic EPS was a loss
of ($0.20) per share for the third quarter of 2016 versus a profit of
$0.02 per share for the third quarter of 2015. The Net Income (Loss)
attributable to ORBCOMM Inc. Common Stockholders includes an Impairment
Loss of ($10.7) million related to an in-orbit OG2 satellite that lost
communication.
Net Income (Loss) – Ex-Items, attributable to ORBCOMM Inc. Common
Stockholders and Basic EPS – Ex-Items are non-GAAP financial measures
used by the Company. Please see the financial tables at the end of the
release for a reconciliation of Net Income (Loss) – Ex-Items,
attributable to ORBCOMM Inc. Common Stockholders and Basic EPS –
Ex-Items.
EBITDA and Adjusted EBITDA
EBITDA for the third quarter of 2016 was ($0.5) million compared to $9.4
million in the third quarter of 2015.
Adjusted EBITDA was $12.0 million for the third quarter of 2016 compared
to $11.0 million in the third quarter of 2015, an increase of 8.5%.
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the
Company to measure operating performance and the quality of earnings.
Please see the financial tables at the end of the release for a
reconciliation of EBITDA and Adjusted EBITDA.
Balance Sheet & Cash Flow
At September 30, 2016, Cash and Cash Equivalents totaled $21.3 million,
compared to $28.1 million at December 31, 2015 that included $1.0
million in Restricted Cash, decreasing ($6.8) million. The Cash decline
was partially offset by the $19.2 million of Cash generated by
operations through the first nine months of 2016. Cash invested in
Capital Expenditures was ($22.5) million, of which ($8.3) million was
due to the completion of milestone and insurance payments for the OG2
program related to the final launch in late 2015 and includes ($1.6)
million of capitalized interest. In addition, we paid ($3.8) million for
the Skygistics acquisition in the second quarter of 2016.
Guidance
For the Full Year 2016, the Company now expects Total Revenues to range
between $188 million and $191 million and Adjusted EBITDA at about 25%
margins to Total Revenues.
Investment Community Conference Call
ORBCOMM will host a conference call and webcast for the investment
community this morning at 8:30 AM ET. Senior management will review the
results, discuss ORBCOMM’s business, and address questions. To access
the call, domestic participants should dial 1-888-401-4642 at least ten
minutes prior to the start of the call. International callers should
dial 1-719-785-9446. To hear a live web simulcast or to listen to the
archived webcast following completion of the call, please visit the
Company’s website at http://investors.orbcomm.com
and then select “News & Events” to access the link to the call. To
listen to a replay of the conference call, please visit
https://event.mymeetingroom.com/Public/WebRegistration/Y29uZmVyZW5jZUlkPTg4OTY5MDEmdHlwZT1yZXBsYXkmbGFuZ3VhZ2U9ZW5nbGlzaA==.
The replay will be available from approximately 1:30 PM ET on November
2, 2016, through 1:30 PM ET on November 16, 2016.
About ORBCOMM Inc.
ORBCOMM Inc. (Nasdaq: ORBC) is a leading global provider of
Machine-to-Machine (M2M) communication solutions and the only commercial
satellite network dedicated to M2M. ORBCOMM’s unique combination of
global satellite, cellular and dual-mode network connectivity, hardware,
web reporting applications and software is the M2M industry’s most
complete service offering. Our solutions are designed to remotely track,
monitor, and control fixed and mobile assets in core vertical markets
including transportation & distribution, heavy equipment, industrial
fixed assets, oil & gas, maritime, mining and government.
With close to two decades of innovation and expertise in M2M, ORBCOMM
has more than 1.6 million subscribers with a diverse customer base
including premier OEMs such as Caterpillar Inc., Doosan Infracore
America, Hitachi Construction Machinery Co., Ltd., John Deere, Komatsu
Ltd., and Volvo Construction Equipment, as well as end-to-end solutions
customers such as C&S Wholesale, Canadian National Railways, CR England,
Hub Group, KLLM Transport Services, Marten Transport, Swift
Transportation, Target, Tropicana, Tyson Foods, Walmart, Union Pacific
Railroad and Werner Enterprises. 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, estimates, objectives and expectations
for future events and other statements that are not historical facts.
Such forward-looking statements, including those concerning the
Company’s expectations and estimates, 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: dependence of SkyWave’s business on its commercial
relationship with Inmarsat plc and the services provided by Inmarsat
plc, including the continued availability of Inmarsat plc’s satellites;
substantial losses we have incurred and may continue to incur; demand
for and market acceptance of our products and services and the
applications developed by us and our resellers; market acceptance and
success of our Automatic Identification System business; dependence on a
few significant customers, including a concentration in Brazil, loss or
decline or slowdown in the growth in business from key customers, such
as Caterpillar Inc., Hitachi Construction Machinery Co., Ltd., Komatsu
Ltd., Onixsat, Satlink S.L., Sascar and Maersk Lines, other value-added
resellers, or VARs, and international value-added resellers, or IVARs,
and other value-added Solution Providers, or SPs; dependence on a few
significant vendors or suppliers, loss or disruption or slowdown in the
supply of products and services from key vendors, such as Inmarsat plc.
and Sanmina Corporation; loss or decline or slowdown in growth in
business of any of the specific industry sectors we serve, such as
transportation, heavy equipment, fixed assets and maritime; our
potential future need for additional capital to execute on our growth
strategy; additional debt service acquired with or incurred in
connection with existing or future business operations; our acquisitions
may expose us to additional risks, such as unexpected costs, contingent
or other liabilities, or weaknesses in internal controls, and expose us
to issues related to non-compliance with domestic and foreign laws,
particularly regarding our acquisitions of businesses domiciled in
foreign countries; the terms of our credit agreement, under which we
currently have borrowed $150 million and may borrow up to an additional
$10 million, could restrict our business activities or our ability to
execute our strategic objectives or adversely affect our financial
performance; the inability to effect suitable investments, alliances and
acquisitions or the failure to integrate and effectively operate the
acquired businesses; fluctuations in foreign currency exchange rates;
the inability of our subsidiaries, international resellers and licensees
to develop markets outside the United States; the inability to obtain or
maintain the necessary regulatory authorizations, approvals or licenses,
including those that must be obtained and maintained by third parties,
for particular countries or to operate our satellites; technological
changes, pricing pressures and other competitive factors; in-orbit
satellite failures or reduced performance of our existing satellites;
the failure of our system or reductions in levels of service due to
technological malfunctions or deficiencies or other events; significant
liabilities created by products we sell; litigation proceedings;
inability to operate due to changes or restrictions in the political,
legal, regulatory, government, administrative and economic conditions
and developments in the United States and other countries and
territories in which we provide our services; ongoing global economic
instability and uncertainty; and changes in our business strategy. In
addition, specific consideration should be given to various factors
described in Part I, Item 1A. “Risk Factors” and Part II, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations”, and elsewhere in our Annual Report on Form 10-K for the
year ended December 31, 2015, and other documents, on file with the
Securities and Exchange Commission. The Company undertakes no obligation
to publicly revise any forward-looking statements or cautionary factors,
except as required by law.
|
|
|
|
ORBCOMM Inc.
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
(in thousands, except par value and share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
September 30,
|
December 31,
|
|
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
21,273
|
|
|
$
|
27,077
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts of
$1,596 and $1,233,
|
|
|
|
|
|
|
|
respectively
|
|
|
34,493
|
|
|
|
29,816
|
|
|
|
|
Inventories
|
|
|
21,718
|
|
|
|
20,712
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
4,357
|
|
|
|
5,646
|
|
|
|
|
Restricted cash
|
|
|
-
|
|
|
|
1,000
|
|
|
|
|
Deferred income taxes
|
|
|
508
|
|
|
|
508
|
|
|
|
|
|
Total current assets
|
|
|
82,349
|
|
|
|
84,759
|
|
|
|
|
|
|
|
|
|
|
|
|
Satellite network and other equipment, net
|
|
|
218,505
|
|
|
|
229,970
|
|
|
|
Goodwill
|
|
|
114,002
|
|
|
|
112,425
|
|
|
|
Intangible assets, net
|
|
|
85,644
|
|
|
|
93,172
|
|
|
|
Other assets
|
|
|
7,378
|
|
|
|
6,573
|
|
|
|
|
|
Total assets
|
|
$
|
507,878
|
|
|
$
|
526,899
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
10,654
|
|
|
$
|
13,895
|
|
|
|
|
Accrued liabilities
|
|
|
27,399
|
|
|
|
24,186
|
|
|
|
|
Current portion of deferred revenue
|
|
|
7,565
|
|
|
|
7,652
|
|
|
|
|
|
Total current liabilities
|
|
|
45,618
|
|
|
|
45,733
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable - related party
|
|
|
1,275
|
|
|
|
1,241
|
|
|
|
Note payable
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
Deferred revenue, net of current portion
|
|
|
3,622
|
|
|
|
6,024
|
|
|
|
Deferred tax liabilities
|
|
|
19,409
|
|
|
|
18,440
|
|
|
|
Other liabilities
|
|
|
3,714
|
|
|
|
5,705
|
|
|
|
|
|
Total liabilities
|
|
|
223,638
|
|
|
|
227,143
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
ORBCOMM Inc. stockholders' equity
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock, par value $0.001; 1,000,000
shares authorized;
|
|
|
|
|
|
|
|
35,757 and 35,759 shares issued and outstanding at September 30,
2016 and
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
357
|
|
|
|
357
|
|
|
|
|
Common stock, par value $0.001; 250,000,000 share authorized;
71,043,788 and
|
|
|
|
|
|
|
|
70,613,642 shares issued at September 30, 2016 and December 31, 2015
|
|
|
71
|
|
|
|
71
|
|
|
|
|
Additional paid-in capital
|
|
|
385,435
|
|
|
|
381,659
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(304
|
)
|
|
|
(1,174
|
)
|
|
|
|
Accumulated deficit
|
|
|
(101,737
|
)
|
|
|
(81,424
|
)
|
|
|
|
Less treasury stock, at cost; 29,990 shares at September 30, 2016
and December 31,
|
|
|
|
|
|
|
|
2015, respectively
|
|
|
(96
|
)
|
|
|
(96
|
)
|
|
|
|
|
Total ORBCOMM Inc. stockholders' equity
|
|
|
283,726
|
|
|
|
299,393
|
|
|
|
|
Noncontrolling interest
|
|
|
514
|
|
|
|
363
|
|
|
|
|
|
Total equity
|
|
|
284,240
|
|
|
|
299,756
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
507,878
|
|
|
$
|
526,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORBCOMM Inc.
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
(in thousands, except per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
28,846
|
|
|
$
|
25,048
|
|
|
$
|
83,454
|
|
|
$
|
72,833
|
|
|
|
|
Product sales
|
|
|
17,442
|
|
|
|
21,036
|
|
|
|
56,458
|
|
|
|
60,464
|
|
|
|
|
|
Total revenues
|
|
|
46,288
|
|
|
|
46,084
|
|
|
|
139,912
|
|
|
|
133,297
|
|
|
|
Cost of revenues, exclusive of depreciation and
|
|
|
|
|
|
|
|
|
|
|
amortization shown below:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
9,791
|
|
|
|
8,766
|
|
|
|
28,330
|
|
|
|
24,788
|
|
|
|
|
Cost of product sales
|
|
|
13,218
|
|
|
|
15,424
|
|
|
|
41,868
|
|
|
|
44,162
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
12,031
|
|
|
|
10,668
|
|
|
|
34,843
|
|
|
|
33,134
|
|
|
|
|
Product development
|
|
|
1,217
|
|
|
|
1,202
|
|
|
|
5,126
|
|
|
|
4,628
|
|
|
|
|
Depreciation and amortization
|
|
|
11,158
|
|
|
|
6,331
|
|
|
|
31,668
|
|
|
|
19,426
|
|
|
|
|
Impairment loss - satellite network
|
|
|
10,680
|
|
|
|
-
|
|
|
|
10,680
|
|
|
|
12,748
|
|
|
|
|
Acquisition - related and integration costs
|
|
|
246
|
|
|
|
500
|
|
|
|
1,179
|
|
|
|
4,061
|
|
|
|
(Loss) income from operations
|
|
|
(12,053
|
)
|
|
|
3,193
|
|
|
|
(13,782
|
)
|
|
|
(9,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
100
|
|
|
|
90
|
|
|
|
283
|
|
|
|
246
|
|
|
|
|
Other income (expense)
|
|
|
426
|
|
|
|
(85
|
)
|
|
|
335
|
|
|
|
307
|
|
|
|
|
Interest expense
|
|
|
(2,471
|
)
|
|
|
(1,332
|
)
|
|
|
(6,615
|
)
|
|
|
(3,906
|
)
|
|
|
|
|
Total other (expense)
|
|
|
(1,945
|
)
|
|
|
(1,327
|
)
|
|
|
(5,997
|
)
|
|
|
(3,353
|
)
|
|
|
(Loss) income before income taxes
|
|
|
(13,998
|
)
|
|
|
1,866
|
|
|
|
(19,779
|
)
|
|
|
(13,003
|
)
|
|
|
Income taxes
|
|
|
(9
|
)
|
|
|
221
|
|
|
|
369
|
|
|
|
312
|
|
|
|
Net (loss) income
|
|
|
(13,989
|
)
|
|
|
1,645
|
|
|
|
(20,148
|
)
|
|
|
(13,315
|
)
|
|
|
|
Less: Net income attributable to the noncontrolling
|
|
|
|
|
|
|
|
|
|
|
interests
|
|
|
52
|
|
|
|
54
|
|
|
|
158
|
|
|
|
175
|
|
|
|
Net (loss) income attributable to ORBCOMM Inc.
|
|
$
|
(14,041
|
)
|
|
$
|
1,591
|
|
|
$
|
(20,306
|
)
|
|
$
|
(13,490
|
)
|
|
|
Net (loss) income attributable to ORBCOMM Inc.
|
|
|
|
|
|
|
|
|
|
|
|
common stockholders
|
|
$
|
(14,048
|
)
|
|
$
|
1,582
|
|
|
$
|
(20,313
|
)
|
|
$
|
(13,517
|
)
|
|
|
Per share information-basic:
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to ORBCOMM Inc.
|
|
|
|
|
|
|
|
|
|
|
|
common stockholders
|
|
$
|
(0.20
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.19
|
)
|
|
|
Per share information-diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to ORBCOMM Inc.
|
|
|
|
|
|
|
|
|
|
|
|
common stockholders
|
|
$
|
(0.20
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.19
|
)
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
70,997
|
|
|
|
70,460
|
|
|
|
70,866
|
|
|
|
70,376
|
|
|
|
|
Diluted
|
|
|
70,997
|
|
|
|
71,918
|
|
|
|
70,866
|
|
|
|
70,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORBCOMM Inc.
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
|
(in thousands)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
$ (20,148)
|
|
|
$ (13,315)
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Change in allowance for doubtful accounts
|
|
|
|
146
|
|
|
167
|
|
|
|
|
Change in the fair value of acquisition-related contingent
consideration
|
|
|
|
(213)
|
|
|
(674)
|
|
|
|
|
Amortization of the fair value adjustment related to warranty
liabilities acquired through acquisitions
|
|
|
|
(57)
|
|
|
(12)
|
|
|
|
|
Amortization of deferred financing fees
|
|
|
|
611
|
|
|
348
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
31,668
|
|
|
19,426
|
|
|
|
|
Impairment loss - satellite network
|
|
|
|
10,680
|
|
|
12,748
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
3,824
|
|
|
3,214
|
|
|
|
|
Foreign exchange loss (gain)
|
|
|
|
|
482
|
|
|
(419)
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
538
|
|
|
62
|
|
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
|
(3,925)
|
|
|
3,408
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
|
(336)
|
|
|
(4,275)
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
134
|
|
|
(470)
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
(1,013)
|
|
|
(8,730)
|
|
|
|
|
Deferred revenue
|
|
|
|
|
|
|
(2,540)
|
|
|
(118)
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
(664)
|
|
|
(175)
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
19,187
|
|
|
11,185
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired
|
|
|
|
(3,452)
|
|
|
(133,078)
|
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
(22,519)
|
|
|
(32,106)
|
|
|
|
Cash held for acquisition
|
|
|
|
|
|
|
-
|
|
|
123,000
|
|
|
|
Change in restricted cash
|
|
|
|
|
|
|
1,000
|
|
|
-
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
(198)
|
|
|
-
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(25,169)
|
|
|
(42,184)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received from issuance of long-term debt
|
|
|
|
-
|
|
|
10,000
|
|
|
|
Cash paid for debt issuance costs
|
|
|
|
|
-
|
|
|
(842)
|
|
|
|
Proceeds received from exercise of stock options
|
|
|
|
-
|
|
|
244
|
|
|
|
Payment of deferred purchase consideration
|
|
|
|
(342)
|
|
|
(1,106)
|
|
|
|
Principal payment of note payable
|
|
|
|
|
-
|
|
|
(10,000)
|
|
|
|
Principal payments of capital leases
|
|
|
|
-
|
|
|
(72)
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
(342)
|
|
|
(1,776)
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
520
|
|
|
(300)
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
(5,804)
|
|
|
(33,075)
|
|
|
|
Beginning of period
|
|
|
|
|
|
|
|
27,077
|
|
|
91,565
|
|
|
|
End of period
|
|
|
|
|
|
|
|
|
$ 21,273
|
|
|
$ 58,490
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
$ 6,581
|
|
|
$ 6,747
|
|
|
Income taxes
|
|
|
|
|
|
|
|
|
$ (110)
|
|
|
$ 584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles our Net Income (Loss) attributable to
ORBCOMM Inc. to EBITDA and Adjusted EBITDA for the periods shown:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
(in thousands)
Adjustments to EBITDA
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
Net Income (Loss) attributable to ORBCOMM Inc.
|
|
|
|
$
|
(14,0141
|
)
|
|
|
$
|
1,591
|
|
|
|
$
|
(20,306
|
)
|
|
|
$
|
(13,490
|
|
|
|
Income Tax Expense
|
|
|
|
|
(9
|
)
|
|
|
|
221
|
|
|
|
|
369
|
|
|
|
|
312
|
|
|
|
Interest Income
|
|
|
|
|
(100
|
)
|
|
|
|
(90
|
)
|
|
|
|
(283
|
)
|
|
|
|
(246
|
)
|
|
|
Interest expense
|
|
|
|
|
2,471
|
|
|
|
|
1,332
|
|
|
|
|
6,615
|
|
|
|
|
3,906
|
|
|
|
Depreciation and amortization
|
|
|
|
|
11,158
|
|
|
|
|
6,331
|
|
|
|
|
31,668
|
|
|
|
|
19,426
|
|
|
|
EBITDA
Adjustmanets to adjusted EBITDA
|
|
|
|
$
|
(521
|
)
|
|
|
$
|
9,385
|
|
|
|
$
|
18,063
|
|
|
|
$
|
9,908
|
|
|
|
Stock-based compensation
|
|
|
|
|
1,219
|
|
|
|
|
979
|
|
|
|
|
3,824
|
|
|
|
|
3,214
|
|
|
|
Minority interest
|
|
|
|
|
52
|
|
|
|
|
54
|
|
|
|
|
158
|
|
|
|
|
175
|
|
|
|
In-ordbit interest
|
|
|
|
|
285
|
|
|
|
|
111
|
|
|
|
|
872
|
|
|
|
|
305
|
|
|
|
Acquisition-related and integeration costs
|
|
|
|
|
246
|
|
|
|
|
500
|
|
|
|
|
1,179
|
|
|
|
|
4,061
|
|
|
|
Impairment loss – satellite network
|
|
|
|
|
10,680
|
|
|
|
|
-
|
|
|
|
|
10,680
|
|
|
|
|
12,748
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
11,961
|
|
|
|
$
|
11,029
|
|
|
|
$
|
34,776
|
|
|
|
$
|
30,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORBCOMM publically reports its financial information in accordance with
accounting principles generally accepted in the United States of America
(“US GAAP”). To facilitate external analysis of the Company’s operating
performance, ORBCOMM also presents financial information that are
considered “non-GAAP financial measures” under Regulation G and related
reporting requirements promulgated by the Securities and Exchange
Commission. Non-GAAP measures should be considered in addition to, and
not as a substitute for, or superior to, Net Income or other measures of
financial performance prepared in accordance with GAAP and may be
different than those presented by other companies. EBITDA, Adjusted
EBITDA and Adjusted EBITDA Margin are not performance measures
calculated in accordance with GAAP and are therefore considered non-GAAP
measures. A reconciliation table is presented above.
EBITDA is defined as earnings attributable to ORBCOMM Inc. before
interest income (expense), loss on debt extinguishment, 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 Adjusted EBITDA, defined as EBITDA
adjusted for stock-based compensation expense, noncontrolling interests,
impairment loss, non-capitalized satellite launch and in-orbit
insurance, insurance recovery, and acquisition-related and integration
costs, is useful to investors to evaluate the Company’s core operating
results and financial performance because it excludes items that are
significant non-cash or non-recurring expenses reflected in the
Condensed Consolidated Statements of Operations. Adjusted EBITDA Margin
equals Adjusted EBITDA divided by Total Revenues.
The following table reconciles our Net Income (Loss) attributable to
ORBCOMM Inc. Common Stockholders to Net Income (Loss) – Ex-Items,
attributable to ORBCOMM Inc. Common Stockholders and Basic EPS to Basic
EPS – Ex-Items for the periods shown:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
(in thousands except per share data)
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders
|
|
|
|
$
|
(14,048
|
)
|
|
|
$
|
1,582
|
|
|
$
|
(20,313
|
)
|
|
|
$
|
(13,517
|
|
|
|
Impairment Loss - satellite network
|
|
|
|
|
10,680
|
|
|
|
|
-
|
|
|
|
10,680
|
|
|
|
|
12,748
|
|
|
|
Acquisition-related and integration costs
|
|
|
|
|
246
|
|
|
|
|
500
|
|
|
|
1,179
|
|
|
|
|
4,061
|
|
|
|
Net Income (Loss) – Ex-Items attributable to ORBCOMM Inc. Common
Stockholders
|
|
|
|
$
|
(3,122
|
)
|
|
|
$
|
2,082
|
|
|
$
|
(8,454
|
)
|
|
|
$
|
3,292
|
|
|
|
Basic EPS
|
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
|
$
|
(0.19
|
)
|
|
|
Impact of Adjustments on Basic EPS
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.01
|
|
|
$
|
0.17
|
|
|
|
$
|
0.24
|
|
|
|
Basic EPS – Ex-Items
|
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
0.03
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) – Ex-Items attributable to ORBCOMM Inc. Common
Stockholders is defined as Net Income (Loss) attributable to
ORBCOMM Inc. Common Stockholders, excluding Impairment Loss-satellite
network, and Acquisition-related and integration costs. Basic EPS –
Ex-Items is defined as Basic EPS excluding Impairment Loss-satellite
network, and Acquisition-related and integration costs. Net Income
(Loss) – Ex-Items attributable to ORBCOMM Inc. Common Stockholders and
Basic EPS – Ex-Items are non-GAAP financial measures used by the
Company. These non-GAAP financial measures are used as a means to
evaluate period-to-period comparisons. These non-GAAP measures are
presented in this press release as management believes that they will
provide investors with a means of evaluating, and an understanding of
how management evaluates, the Company’s performance and results on a
comparable basis that is not otherwise apparent on a GAAP basis, since
many non-recurring, infrequent or non-cash items that management
believes are not indicative of the core performance of the business may
not be excluded when preparing financial measures under GAAP. These
non-GAAP measures should not be considered in isolation from, as
substitutes for, or superior to financial measures prepared in
accordance with GAAP, or may be different from similarly titled measures
reported by other companies. A reconciliation table is presented above.

View source version on businesswire.com: http://www.businesswire.com/news/home/20161102005606/en/
Source: ORBCOMM Inc.
Investors Inquiries:
ORBCOMM Inc.
Michelle
Ferris, 703-433-6516
Director of Corporate Communications
ferris.michelle@orbcomm.com
or
Financial
and Trade Media:
The Abernathy MacGregor Group
Alan
Oshiki, 212-371-5999
Executive Vice President
aho@abmac.com