MCLEAN, Va., May 10, 2011 (GLOBE NEWSWIRE) -- Iridium Communications Inc. (Nasdaq:IRDM) ("Iridium") today reported strong financial results for the first quarter of 2011 and updated its outlook for the full-year 2011. Net income was $8.3 million for the first quarter of 2011, as compared to a net loss of $1.3 million for the first quarter of 2010. Operational EBITDA ("OEBITDA")(1) for the first quarter was $43.1 million, as compared to $33.5 million for the prior-year period, representing year-over-year growth of 29 percent and an OEBITDA margin(1) of 47 percent. OEBITDA benefited from solid growth in commercial service, government service and equipment revenue.
Iridium reported first-quarter total revenue of $91.3 million, which consisted of $61.2 million of service revenue and $30.1 million of equipment and engineering and support revenue. Total revenue grew 12 percent versus the comparable period of 2010, while service revenue increased 12 percent from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium's growing subscriber base, was 67 percent of total revenue for the first quarter of 2011.
The Company ended the quarter with 447,000 total billable subscribers, which compares to 359,000 for the year-ago period and 427,000 for the quarter ended December 31, 2010. Total billable subscribers grew 25 percent year-over-year, driven by ongoing strength in machine-to-machine ("M2M") data, handheld voice, Netted Iridium and Iridium OpenPort® customers.
Capital expenditures were $56.2 million for the first quarter and primarily related to spending for the Company's next-generation satellite constellation, Iridium NEXT, and upgraded ground network infrastructure at its commercial gateway. The Company ended the first quarter with a cash and cash equivalents balance of $103.9 million and gross debt of $183.4 million. Net debt was $79.5 million.
"We're off to a strong start in 2011, as we continue to benefit from a high-quality and diversifying revenue profile that is moving beyond voice to fast-growing data services," said Matt Desch, Iridium's chief executive officer. "Commercial M2M subscribers grew 62% year-over-year, and we're capturing more data revenue from the Iridium OpenPort terminals we've shipped to our maritime customers. The rapid adoption of our Iridium 9602 short-burst data ("SBD") transceiver has been so strong that it led to an upward revision of our equipment revenue outlook for 2011, as significant sales volumes more than offset the lower price of this device compared to its predecessor."
Desch continued, "We've also sustained our leading competitive position in the handheld voice market, increasing commercial voice subscribers 12% year-over-year on strong handset unit sales growth of 39%. The Iridium 9555 phone remains the 'gold standard' for mobility, reliability and global coverage, but we're not stopping here as the market leader. Innovation will define our future path in this business, and we expect to broaden our product portfolio with greater choices and enhanced features."
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing 50 percent of the Company's total revenue during the first quarter. Iridium remains a top choice for many of its more than 250 partners due to a superior network and better economics when they sell our solutions. The Company will continue to capitalize on organic growth opportunities in each of its vertical markets by sustaining a leading competitive position and expanding its service portfolio.
- Commercial service revenue was $45.3 million, an 11 percent increase from last year's comparable period, primarily supported by gains in Iridium OpenPort and M2M data customers.
- Commercial voice average revenue per user ("ARPU") was $47 during the first quarter, a 6 percent year-over-year decrease. Voice ARPU decreased due to lower postpaid customer usage, partially offset by growth in the higher ARPU Iridium OpenPort service. Commercial M2M data ARPU was $18 during the first quarter, unchanged from last year's comparable period.
- Iridium's commercial business ended the quarter with 401,000 billable subscribers, which compares to 324,000 for the prior-year quarter and to 384,000 for the quarter ended December 31, 2010. M2M data subscribers increased 62 percent year-over-year and represented 31 percent of billable commercial subscribers, an increase from 23 percent at the end of the prior-year period.
Service - Government
Government service revenue increased by 15 percent during the quarter, reflecting the Company's growth in the last several years from a niche supplier to an integral element in the U.S. Government communications infrastructure. Iridium's voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.
- Government service revenue was $15.9 million, compared with $13.8 million in the prior-year period, primarily driven by growth in M2M data and Netted Iridium subscribers.
- Government voice ARPU was $140 during the first quarter, a 7 percent year-over-year decrease. Voice ARPU declined as a result of strong growth in lower ARPU Netted Iridium subscribers. Government M2M data ARPU was $22 during the first quarter, a 10 percent increase from last year's comparable period.
- Iridium's government business ended the quarter with 46,000 billable subscribers, which compares to 35,000 for the prior-year quarter and to 43,000 for the quarter ended December 31, 2010. M2M data subscribers increased 80 percent year-over-year and represented 20 percent of billable government subscribers, an increase from 14 percent at the end of the prior-year period.
- Equipment revenue was $24.4 million during the first quarter, a 12 percent year-over-year increase. Revenue increased primarily due to strong M2M and handset sales volumes. M2M unit sales grew 134 percent from the year-ago period due to the rapid adoption of the smaller and lower cost Iridium 9602 SBD transceiver, while handset unit sales increased 39 percent from the year-ago period. The Company's handset sales volumes have remained strong despite increased competition during the last four quarters, as customers continue to value the performance and features of the Iridium 9555 phone.
Engineering & Support
- Engineering and support revenue was $5.7 million during the first quarter, a gain of 5 percent from the prior-year period, primarily resulting from an increase in lower margin contract revenue related to ongoing government gateway upgrade projects.
The Company updated its guidance for equipment revenue, while affirming its previously issued full-year 2011 outlook for total billable subscriber growth, service revenue and OEBITDA. The Company now expects:
- Total billable subscriber growth to be approximately 20 percent for the full-year 2011
- Service revenue growth between 10 percent and 13 percent for the full-year 2011
- Equipment revenue decline between 5 percent and 15 percent for the full-year 2011
- Full-year 2011 OEBITDA to be between $180 million and $190 million. OEBITDA for 2010 was $158.9 million.
Non-GAAP Financial Measures & Definitions
(1) In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company discloses Operational EBITDA and Operational EBITDA margin, which are non-GAAP financial measures, as supplemental measures to help investors evaluate the Company's fundamental operational performance. Operational EBITDA represents earnings before interest, income taxes, depreciation and amortization, Iridium NEXT revenue and expenses (for periods prior to the deployment of Iridium NEXT), stock-based compensation expenses, transaction expenses associated with GHL Acquisition Corp.'s acquisition of Iridium Holdings LLC (the "Acquisition"), the impact of purchase accounting, and changes in the fair value of warrants. The Company also presents Operational EBITDA expressed as a percentage of adjusted revenue, or Operational EBITDA margin. Adjusted revenue excludes the impact of purchase accounting and Iridium NEXT revenue. Operational EBITDA does not represent, and should not be considered, an alternative to U.S. GAAP measurements such as net income or loss, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. By eliminating interest, income taxes, depreciation and amortization, Iridium NEXT revenue and expenses (for periods prior to the deployment of Iridium NEXT only), stock-based compensation expenses, transaction expenses associated with the Acquisition, the impact of purchase accounting and changes in the fair value of warrants, the Company believes the result is a useful measure across time in evaluating our fundamental core operating performance. Management also uses Operational EBITDA to manage the business, including in preparing its annual operating budget, debt covenant compliance, financial projections and compensation plans. The Company believes that Operational EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries. However, there is no standardized measurement of Operational EBITDA, and Operational EBITDA as the Company presents it may not be comparable with similarly titled non-GAAP financial measures used by other companies. As indicated, Operational EBITDA does not include interest expense on borrowed money or the payment of income taxes or depreciation expense on the Company's capital assets, which are necessary elements of the Company's operations. It also excludes expenses in connection with the development, deployment and financing of Iridium NEXT. Since Operational EBITDA does not account for these and other expenses, its utility as a measure of our operating performance has material limitations. Due to these limitations, our management does not view Operational EBITDA in isolation and also uses other measurements, such as net income, revenues and operating profit, to measure operating performance. Please refer to the schedule below for a reconciliation of Operational EBITDA to consolidated GAAP net income and Iridium's Investor Relations webpage at for a discussion and reconciliation of this and other non-GAAP financial measures.
Conference Call Information
As previously announced, the Company will host a conference call to discuss results at 8:30 a.m. ET on Tuesday, May 10, 2011. Callers should dial (877) 334-1964 (U.S. only) or (631) 291-4574 (from outside the U.S.) to access the call. The conference call will also be simultaneously webcast on Iridium's Investor Relations webpage at . A replay of the conference call will be available beginning Tuesday, May 10, 2011 through Tuesday, May 17, 2011 at Iridium's Investor Relations webpage. Callers can also dial (800) 642-1687 (U.S. only) or (706) 645-9291, Access Code 52968844, for an audio replay of the conference call.
About Iridium Communications Inc.
Iridium Communications Inc. () is the only mobile satellite service (MSS) company offering coverage over the entire globe. The Iridium constellation of low-Earth orbiting (LEO) cross-linked satellites provides critical voice and data services for areas not served by terrestrial communication networks. Iridium serves commercial markets through a worldwide network of distributors, and provides services to the U.S. Department of Defense and other U.S. and international government agencies. The Company's customers represent a broad spectrum of industry, including maritime, aeronautical, government/defense, public safety, utilities, oil/gas, mining, forestry, heavy equipment and transportation. Iridium has launched a major development program for its next-generation satellite constellation, Iridium NEXT. The Company is headquartered in McLean, Va., U.S.A. and trades on the NASDAQ Global Select Market under the ticker symbols IRDM (common stock), IRDMW ($7.00 warrants), IRDMZ ($11.50 warrants) and IRDMU (units).
Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the development of Iridium NEXT, the development of the product portfolio, anticipated growth in subscribers and total service revenue, anticipated decline in equipment revenue and anticipated growth in Operational EBITDA for 2011. Other forward-looking statements can be identified by the words "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and other expressions that are predictions or indicate future events, trends or prospects. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Iridium to differ materially 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, uncertainties regarding increases in customer demand for Iridium's products and services, Iridium's ability to maintain the health, capacity and content of its satellite constellation, and the development of and transition to Iridium NEXT, including expanded capacity and features, as well as general industry and economic conditions, and competitive, legal, governmental and technological factors. Other factors that could cause actual results to differ materially from those indicated by the forward-looking statements include those factors listed under the caption "Risk Factors" in the Company's Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on March 7, 2011. There is no assurance that Iridium's expectations will be realized. If one or more of these risks or uncertainties materialize, or if Iridium's underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. Iridium's forward-looking statements speak only as of the date of this press release, and Iridium undertakes no obligation to update forward-looking statements.
CONTACT: Investor Contact: Steve Kunszabo Iridium Communications Inc. +1 (703) 287-7570 firstname.lastname@example.org Press Contact: Marie Knowles Iridium Communications Inc. +1 (703) 287-7476 email@example.com