ORBCOMM Inc., a global provider of Machine-to-Machine (M2M) solutions, has announced financial results for the first quarter ended March 31, 2015.
- ORBCOMM completed the acquisitions of SkyWave and InSync which had a positive impact on year-over-year comparisons. First quarter 2015 results include a full quarter of SkyWave and approximately eleven weeks of InSync with organic growth of over 30%.
- For the first quarter of 2015, Total Revenues were up 119% year-over-year to $42.3 million. Service Revenues were up 65% over the prior year to $23.8 million. First quarter 2015 Product Sales of $18.6 million were 277% higher than the prior year.
- Adjusted EBITDA for the first quarter of 2015 was $9.0 million, $5.4 million or 149% higher than the prior year. ORBCOMM’s basic EPS is ($0.04) for the first quarter of 2015 compared to ($0.01) for the comparable period last year, lower largely due to higher Depreciation and Amortization expense of $6.5 million related to additional satellites put into service in late-2014 and acquired intangible assets, Acquisition-Related and Integration costs of $2.5 million related to the recent acquisitions of SkyWave and Insync and higher Interest Expense of $1.2 million. Excluding Acquisition-Related and Integration costs of $2.5 million, Adjusted Net Loss was $0.4 million and Adjusted basic EPS was ($0.01) for the first quarter of 2015 compared to Adjusted Net Income of $0.8 million and Adjusted basic EPS of $0.01 for the comparable period last year.
- Net subscriber communicator additions for ORBCOMM were 286,000 in the first quarter of 2015, bringing the total billable subscriber communicators to 1,262,000 at March 31, 2015, compared to 889,000 at the end of the first quarter last year, with the core business adding 36,000 subscribers. This includes the approximately 250,000 incremental subscribers added in the first quarter of 2015 from the acquisition of SkyWave. Billable subscriber communicators increased 42% year-over-year.
- On April 15, 2015, ORBCOMM announced that Iron Mountain Inc., the storage and information management company, will be utilizing InSync’s iApp software and RFID-enabled Audit Carts (iRover) for its RFID-enabled Inventory Governance Solution. InSync’s best-in-class software is currently being installed at Iron Mountain’s storage sites around the world. InSync worked closely with Iron Mountain to design, deploy and support a complete solution that provides its global customers with access to unsurpassed levels of stored records visibility, auditing and validation capabilities.
- On April 16, 2015, ORBCOMM announced that it has received the Mobile Satellite Users Association (MSUA) 2015 Innovation Award for SkyWave’s IsatData Pro (IDP) service. The award was presented to ORBCOMM at an awards luncheon at the MSUA-12 Conference on March 17, which was held in conjunction with the Satellite 2015 Conference & Exhibition in Washington, DC.
- On May 6, 2015, ORBCOMM announced that LBX Company (LBX), the maker of Link-Belt hydraulic excavators, selected ORBCOMM to provide satellite data communications for its global Original Equipment Manufacturer (OEM) telematics application. LBX will utilize the ORBCOMM satellite network to enable its customers to track and monitor their heavy machinery worldwide through its RemoteCARE equipment management tool. Leveraging ORBCOMM’s cost-effective and reliable satellite connectivity, LBX customers can significantly reduce operating costs, minimize equipment downtime and increase theft prevention, while gaining complete equipment visibility and performance monitoring metrics.
“We’re pleased with the fast start to 2015,” says Marc Eisenberg, ORBCOMM’s Chief Executive Officer. “We’ve made great progress on integrating the SkyWave and InSync acquisitions and are encouraged by the opportunities for our combined offerings including best-in-class connectivity services, hardware solutions, web applications and software, across incremental markets and geographies. There is a lot to look forward to in the latter half of the year including our second OG2 launch, multiple large deployments, as well as new opportunities.”
“First quarter 2015 was highlighted by record Total Revenues of $42.3 million and Adjusted EBITDA of $9.0 million,” says Robert Costantini, Chief Financial Officer of ORBCOMM. “Our revenues increased organically by over 30% and through acquisition. Higher revenues and cost synergies improved Adjusted EBITDA margins to 21.4%.”
Financial Results and Highlights
For the first quarter ended March 31, 2015, Service Revenues were up 65% over the prior year period in 2014 to $23.8 million. The increase in Service Revenues in Q1 of 2015 was driven by core network revenues, AIS, Euroscan and the recent acquisitions of SkyWave and InSync.
Product Sales during the first quarter of 2015 were $18.6 million compared to $4.9 million during the same period last year, increasing $13.6 million or 277%. The quarterly year-over-year increase in Product Sales was driven by large customer orders for our solutions, in additional to sales from Euroscan and SkyWave.
Total Revenues for the quarter ended March 31, 2015 were $42.3 million compared to $19.4 million during the same period of 2014, an increase of 119%.
Direct Costs and Operating Expenses
Total direct costs and operating expenses for the first quarter of 2015 were $43.6 million compared to $19.6 million during the same period in 2014. Direct costs, exclusive of Depreciation and Amortization, increased year-over-year largely due to increases in both Service Revenues and Product Sales and costs to operate the companies acquired. Gross Profit increased by $10.4 million or 102% to $20.7 million for the quarter ended March 31, 2015 compared to $10.3 million for the prior year quarter due to the increase in Service Revenues and Product Sales. Operating Expenses were higher than the prior year period primarily due to expenses from the companies acquired such as acquired employees, increases in professional services, higher Depreciation and Amortization from the six operational OG2 satellites commencing service in Q3 last year and acquired intangible assets, and higher Acquisition-Related and Integration costs of $2.5 million related to SkyWave and Insync.
Income (Loss) Before Income Taxes, Net Income (Loss), and Earnings Per Share
Income (Loss) Before Income Taxes for the first quarter of 2015 was a $2.3 million loss compared to a $0.2 million loss for the first quarter of 2014 due to higher costs as described above and higher Interest Expense related to debt financings to fund the acquisitions of SkyWave and InSync.
Net Income (Loss) attributable to ORBCOMM Inc. Common Stockholders was a $2.9 million loss for the three months ended March 31, 2015 compared to a $0.4 million loss for the same three-month period in 2014. Basic Earnings Per Share were ($0.04) for the first quarter of 2015 versus ($0.01) for the first quarter of 2014.
EBITDA and Adjusted EBITDA
EBITDA for the first quarter of 2015 was $5.2 million compared to $1.5 million in the first quarter of 2014 and includes $2.5 million in Acquisition-Related and Integration costs.
Adjusted EBITDA was $9.0 million for the first quarter of 2015 compared to $3.6 million in the first quarter of 2014, an increase of 149%.
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the company.
Balance Sheet & Cash Flow
At March 31, 2015, Cash and Cash Equivalents, Cash Held for Acquisition and Restricted Cash were $81.9 million, compared to $215.8 million at December 31, 2014, decreasing $133.9 million. Cash decreased primarily due to the purchase of SkyWave and InSync and repayment of the $10.0 million revolving credit facility to Macquarie, offset by Cash from Operations of $4.8 million and Insync debt financing of $10.0 million.