Iridium Communications Inc reported solid financial results for the fourth quarter of 2011 and issued its outlook for the full-year 2012. Net income was $8.4 million, or $0.11 per diluted share, for the fourth quarter of 2011, as compared to $10.1 million, or $0.14 per diluted share, for the fourth quarter of 2010. Operational EBITDA for the fourth quarter was $44.3 million, as compared to $42.3 million for the prior-year period, representing year-over-year growth of 5 percent and an OEBITDA margin(1) of 47 percent. OEBITDA benefited from solid growth in commercial service and government service revenue.
Iridium reported fourth-quarter total revenue of $95.0 million, which consisted of $66.6 million of service revenue and $28.4 million of equipment, engineering and support revenue. Total revenue grew 8 percent versus the comparable period of 2010, while service revenue increased 11 percent from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 70 percent of total revenue for the fourth quarter of 2011.
The Company ended the quarter with 523,000 total billable subscribers, which compares to 427,000 for the year-ago period and 508,000 for the quarter ended September 30, 2011. Total billable subscribers grew 22 percent year-over-year, driven by strength across all primary product lines.
Capital expenditures were $119.1 million for the fourth 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 fourth quarter with a cash and cash equivalents balance of $136.4 million and gross debt of $417.1 million. Net debt was $253.8 million.
“2011 was a record year for Iridium as we reached important milestones for subscriber, service revenue and cash flow growth,” said Matt Desch, CEO, Iridium. “Our ongoing success is rooted in having a superior network, unmatched capabilities in the highest growth segments of our market and a sustainable set of product-related competitive advantages anchored by a motivated partner channel. 2012 is shaping up to be another year of growth as we expect to cross the $200 million Operational EBITDA threshold on our way to launching Iridium NEXT.”
Desch continued, “We’re obsessive innovators, and we’ll continue to expand and improve our service portfolio in 2012 and beyond. With the recent launch of Iridium PilotTM, our second-generation maritime broadband platform, we’re bringing enhanced voice and broadband data capabilities to our customers all over the world at a low cost. We’ll also deliver a new, 70 percent smaller M2M device in the next few months, building on the success of a market that has grown subscribers at least 50 percent year-over-year for five consecutive quarters. Iridium remains healthy and strong, and we continue to make the right decisions to support recurring service revenue growth and operating cash flow expansion.”
Full-Year 2011 Iridium Business Highlights
For the full year, Iridium reported net income of $39.7 million, or $0.54 per diluted share, as compared to net income of $22.7 million, or $0.31 per diluted share, for 2010. The Company reported 2011 total revenue of $384.3 million, which included $262.3 million of service revenue and $122.0 million of equipment, engineering and support revenue. OEBITDA for 2011 was $190.4 million, as compared to $158.9 million for the prior-year, representing year-over-year growth of 20 percent and an OEBITDA margin of 49 percent. Capital expenditures were $359.4 million for the full-year 2011.
Long-Range Outlook
The Company affirmed its previously issued long-range outlook for service revenue, OEBITDA margin, cash taxes, net leverage and rate of deleveraging. The Company expects:
·Average service revenue growth between 9 percent and 13 percent per year between 2011 and 2015
·OEBITDA margin of approximately 60 percent in 2015
·Negligible cash taxes from 2011 to approximately 2020
·Net leverage (net debt:OEBITDA) of approximately 3x at year-end 2012, 4x-5x at year-end 2015
·Decrease net leverage by an average of 0.5 to 1.0 multiple of OEBITDA per year beginning in 201
