- Total Subscribers Up 31.2% from Prior Year Quarter to 328,000
BETHESDA, Md., June 2 /PRNewswire/ -- Iridium Satellite LLC, the
only provider of truly global mobile satellite communications
services, today reported consolidated financial results for the
three months ended March 31, 2009. Operating Highlights Subscribers
in the first quarter 2009 were up 31.2% to 328,000 from 250,000 in
the first quarter of 2008. While subscriber equipment revenue
declined 34.3% to $20.5 million in the first quarter of 2009
compared to $31.2 million in the first quarter of 2008, commercial
service revenue increased 26.9% in the first quarter of 2009 to
$36.8 million, compared to $29.0 million in the first quarter of
2008, such that overall revenue increased 2.0% to $75.8 million in
the first quarter of 2009 from $74.3 million for the first quarter
of 2008. Operational EBITDA(1) increased 4.9% to $27.6 million in
the first quarter of 2009 from $26.3 million in the first quarter
of 2008. Net income declined 41.9% to $9.7 million in the first
quarter of 2009 from $16.7 million in the first quarter of 2008,
primarily due to increased expenses related to Iridium NEXT, the
company's next-generation satellite program. "Iridium continued to
grow, although the pace slowed given the current economic climate,"
said Matt Desch, chief executive officer, Iridium. "Our growth in
the quarter was driven by high-margin commercial service revenues,
which are stable and recurring. At the same time, our subscriber
equipment sales slowed, although equipment sales remained
profitable for the company. "Iridium remains unique for our truly
global coverage, with a diversity of applications that are prized
by our customers and delivered by a vast ecosystem of service
providers. Iridium provides critical services in the maritime,
government, aviation and industrial sectors that operate in remote
locations, in the air and at sea, where there is often no
communication alternative. Communicating to and from remote
locations is not a luxury for our customers, and this is evident in
Iridium's continued service revenue and subscriber growth," said
Desch. On the decline in equipment sales, year-over-year
comparisons of revenue are affected by $2 million of equipment
amortization relating to sales of equipment in prior years that are
included in the first quarter of 2008. Without the impact of the
amortization, overall revenue would have increased 4.8% versus 2.0%
and equipment revenue would have declined by 29.8% versus 34.3%.
Desch commented, "In addition to the impact of phasing out
equipment amortization, we believe the general economic climate is
affecting equipment sales, as is the transition of newly introduced
products into the distribution channel as our partners move
existing inventory to make way for new product." "Iridium continued
its growth and remained profitable during a tough first quarter in
the global economy," Desch concluded. "And we expect to continue to
grow through the remainder of 2009, on the strength of our service
revenues and as our new products gain traction in the market. We
expect operational EBITDA to grow in the range of 11% to 20% to
produce between $120 and $130 million on low single-digit revenue
growth during 2009." Transaction Highlights As previously
announced, on April 28, 2009, Iridium and GHL Acquisition Corp.
(NYX: GHQ), or GHL Acquisition, amended the transaction proposed by
the two companies on September 23, 2008. The amendment revised the
total consideration payable to Iridium owners to reflect changes in
equity market valuations since the parties entered the original
transaction agreement. The companies anticipate that the deal will
close in the coming months, pending the completion of regulatory
approvals and approval by GHL Acquisition shareholders. In
connection with the transaction, GHL Acquisition has retained
Deutsche Bank as a financial advisor. Separately, Banc of America
Securities LLC (BofA), together with its affiliates, agreed to sell
all of the approximately 3.7 million GHL Acquisition warrants that
it owns to GHL Acquisition for an aggregate consideration of
approximately $1.8 million, subject to the closing of the
transaction between GHL Acquisition and Iridium. GHL Acquisition
may, subject to market conditions, engage in various open-market
and privately negotiated transactions in its common stock and
warrants, such as this transaction with BofA. GHL Acquisition
further announced that BofA has agreed to reduce the amount of its
deferred underwriting compensation by approximately $8.2 million.
Growth Highlights Iridium reported growth over the prior year
quarter in commercial service revenue and subscribers, as well as
growth in government services revenue. Commercial Combined
commercial voice and data traffic in the markets that Iridium
serves, including maritime, aviation and land mobile, grew 11.5%
for the first quarter of 2009 compared to the same period in 2008.
This included growth in voice traffic of 7.1% and growth in data
traffic of 23.2% during the quarter, as compared to the same
quarter in 2008. "Despite the economy, ships are sailing and
Iridium is one of the most cost-effective communications options
available to them - especially in industries such as fishing," said
Don Thoma, executive vice president, marketing, Iridium. "Maritime
continues to represent great opportunity for Iridium, and crew
calling remains a bright spot with particularly strong growth for
first quarter 2009 over the first quarter of last year. Recently
introduced products like Go-Chat pre-paid calling cards for crew
usage, coupled with targeted promotions, are helping to drive usage
in this important customer base." "We are also encouraged by what
we are hearing from the market as we have begun the roll out of
Iridium OpenPort(R), our innovative global marine satellite
communication system," added Thoma. "Iridium OpenPort has generated
positive feedback from the hundreds of units that are now deployed.
Iridium OpenPort is a more attractive alternative in terms of
hardware, installation and service costs and is extremely timely in
the current economic climate." Commenting on the aviation industry,
Thoma said, "Iridium also continued to make progress in this
growing market. Despite widely reported softening in usage in the
business jets market, Iridium strength in aviation during the first
quarter was driven by usage by petroleum service helicopters, air
transport, medevacs and other specialized aviation installations."
In addition to strong commercial voice and data growth, Iridium's
machine-to-machine (M2M) short-burst data subscribers nearly
doubled in the first quarter of 2009 in comparison to the first
quarter 2008, and Iridium experienced 72.7% growth in service
revenue over the prior year quarter. Iridium's benefit to our
customer's bottom line is particularly evident in the growing
diversity of Iridium-based M2M applications in the market. "Iridium
is now moving more than one million data messages per day through
its network," said Greg Ewert, executive vice president, global
distribution channels, Iridium. "Applications such as asset
monitoring add quantifiable value and represent cost-saving
solutions to a wide array of diverse industries." Government
Iridium service revenue from its contracts with the U.S. Department
of Defense (DoD) grew 31.2% for the first quarter of 2009 compared
to the first quarter of 2008, including from Iridium's Enhanced
Mobile Satellite Services (EMSS) contract with the Defense
Information Services Agency and the company's contract for support
of the DoD's dedicated Iridium gateway. "Iridium's innovative
technology advancements continue to make our government customers
safer and more mission effective," said retired USAF Lt. Gen. John
Campbell, executive vice president, government programs, Iridium.
"Iridium helps meet the communications needs of government agencies
around the world, and we continue to experience growing demand for
services as the DoD uses Iridium M2M services to track assets
deployed in or moved among various theaters." Several Iridium
Value-Added Resellers, such as NAL Research and Impeva Labs, have
ongoing programs to assist in the tracking of military assets in
transit. The U.S. government also continues to invest in new
Iridium applications such as Netted Iridium, the company's
push-to-talk capability, which is under development. Netted Iridium
is being used today on a test basis by soldiers in-theater for
improved "over-the-horizon" tactical communications capability, and
Iridium anticipates being able to supply production units under
contract by the end of next quarter. Update on Iridium NEXT
Planning for Iridium's next-generation satellite network, Iridium
NEXT, is on track, and the company plans to begin deployment of the
new constellation in 2014. In the coming months, the company
expects to conclude the competitive selection of either Lockheed
Martin or Thales Alenia Space to be the Iridium NEXT prime
contractor. Iridium NEXT will be designed to seamlessly replace the
current constellation with new satellites, providing enhanced
capabilities, higher data speeds and greater bandwidth while
maintaining Iridium's unique attributes of low-latency, global
coverage. It also will offer the potential for new data services
and applications and the unprecedented opportunity to affordably
host secondary payloads on Iridium's global constellation.
(1)Non-GAAP Financial Measures In addition to disclosing financial
results that are determined in accordance with U.S. GAAP, Iridium
discloses operational EBITDA, which is a non-GAAP financial measure
and management believes it is the most comparable measure to GAAP
net income. Operational EBITDA represents earnings before interest;
income taxes; depreciation and amortization; Iridium NEXT
(second-generation system development) revenue and expenses; and
expenses associated with the proposed transaction with GHL
Acquisition. Additionally, operational EBITDA does not include the
impact of purchase accounting and other transaction-related
adjustments that will be reflected in the post-transaction
performance. Operational EBITDA does not represent and should not
be considered an alternative to GAAP measurements, such as net
income, and the company's calculations thereof may not be
comparable to similarly entitled measures reported by other
companies. Management uses operational EBITDA to manage the
company's business including preparation of its annual operating
budget, financial projections and compensation plans. The company
uses operational EBITDA as a supplemental measure for operating
performance because, by eliminating interest, taxes, depreciation
and amortization, transaction expenses and Iridium NEXT revenue and
expenses, the company believes it is a useful measure across time
in evaluating the company's performance. The company believes that
operational EBITDA is also useful to investors because like
measures are frequently used by securities analysts, investors and
other interested parties in their evaluation of companies in
similar industries. As indicated, operational EBITDA does not
include interest expense on borrowed money or depreciation expense
on our capital assets or the payment of income taxes, which are
necessary elements of the company's operations. Because operational
EBITDA does not account for these expenses, its utility as a
measure of the company's operating performance has material
limitations. Because of these limitations, the company's 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. Iridium's calculations of
operational EBITDA may also differ from the calculation of
operational EBITDA or like measures by its competitors and other
companies and, as such, their utility as comparative measures is
limited. Included in this release is a reconciliation of net income
(loss) to operational EBITDA. Conference Call Information Iridium
and GHL Acquisition will host a conference call for analysts,
investors and other interested parties on June 3, 2009 at 8:30 a.m.
Eastern Time (ET) to discuss this earnings release. To participate,
please call the toll-free number (866) 481-9047 (U.S. callers only)
or, from outside the U.S., (706) 902-1870. The passcode for the
live call is 12985109. For those unable to participate in the live
call, a replay of the call will be available for 30 days toll-free
at (800) 642-1687 (U.S. callers only), or at (706) 645-9291
(callers outside the U.S.). The passcode for the replay is
12985109. To help ensure the conference begins in a timely manner,
please dial in five minutes prior to the scheduled start time.
Forward-Looking Statements This press release contains, and
Iridium's management may make, certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. The words "anticipates," "may," "can," "believes,"
"expects," "projects," "intends," "likely," "will," "to be" and
other expressions that are predictions of or indicate future
events, trends or prospects identify forward-looking statements.
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 the timing of the proposed transaction with GHL
Acquisition, whether the transaction will be approved by GHL
Acquisition's stockholders, whether the closing conditions will be
satisfied (including receipt of regulatory approvals), as well as
industry and economic conditions, and competitive, legal,
governmental and technological factors. 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 or as of the date they are made, and, except as required by
law, Iridium undertakes no obligation to update forward-looking
statements. About Iridium Satellite Iridium Satellite LLC
(http://www.iridium.com/) 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's subscriber growth has
been driven by increasing demand for reliable, global
communications. Iridium serves commercial markets through a
worldwide network of hundreds of distributors, and provides
services to the U.S. DoD, 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, which will result in continued and new
Iridium MSS offerings. The company is headquartered in Bethesda,
Md. and is currently privately held. Consolidated Historical
Financial Data Three Months Ended March 31,
----------------------------- ------------------ Statement of
Operations Data: 2008 2009 ----------------------------- ---- ----
Total revenue 74,300 75,789 Total operating expenses (52,838)
(61,364) Operating profit 21,462 14,425 Total other income /
expense (4,740) (4,707) Net income 16,722 9,718 As of -----
December 31, March 31, ------------------- ----------- --------
Balance Sheet Data: 2008 2009 ------------------- ---- ---- Total
current assets 101,355 115,589 Total assets 190,569 203,037 Total
members' deficit (62,230) (51,467) Reconciliation of Net Income to
Operational EBITDA Three Months Ended March 31, ------------------
2008 2009 ---- ---- Net income $16,722 $9,718 Interest expense
5,169 4,622 Interest income (435) 17 Depreciation and amortization
2,968 3,675 Non-recurring transaction expenses 236 697 Iridium NEXT
expenses 1,663 8,841 ----- ----- Operational EBITDA $26,323 $27,570
DATASOURCE: Iridium Satellite LLC CONTACT: Liz DeCastro, Iridium
Satellite LLC, +1-301-571-6257, Web Site: http://www.iridium.com/
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