Iridium Posts $16.6-M Net Income in 3Q, Upgrades Outlook with DoD Contract
Mclean, Va., Oct. 31, 2013 — Iridium Communications Inc. reported net income of US$ 16.6 million and third-quarter total revenue of $100.6 million, beating analysts’ expectations after the company’s commercial service revenue grew 9 percent.
But the company’s government service revenues declined 8 percent for the seventh consecutive quarter, driven by troop withdrawals from Afghanistan and a messy U.S. government budget environment. Iridium also reported its weakest subscriber growth since 4Q09, adding only 8,000 subscribers sequentially against analysts forecast of around 20,000 and year-ago net additions of 19,000.
Iridium’s $16.6 million income, equivalent to $0.19 per diluted share, was better when compared to $17.8 million, or $0.23 per diluted share, for the third quarter of 2012. Operational EBITDA for the third quarter was $53.3 million, compared to $57.6 million for the prior-year period, representing a year-over-year decline of 7 percent and an OEBITDA margin of 53 percent.
Iridium said third-quarter total revenue of $100.6 million consisted of $75.4 million of service revenue and $25.2 million of equipment, engineering and support revenue. Total revenue was unchanged versus the comparable period of 2012, while service revenue grew 6 percent from the year-ago period.
The company said it ended the quarter with 655,000 total billable subscribers, which compares to 595,000 for the year-ago period and is up from 647,000 for the quarter ended June 30, 2013. Total billable subscribers grew 10 percent year-over-year, driven by strength in machine-to-machine and commercial voice customers.
Iridium recently signed a new five-year US$ 400 million service contract with the DoD that is one-third larger than Iridium’s existing DoD contract, providing optimism in the company’s outlook in the coming months.
"We're pleased to have recently closed on landmark services and support contracts with the U.S. Department of Defense, reaffirming the importance of Iridium's solutions to our single biggest customer," said CEO Matt Desch.
"These agreements totaling US$ 438 million over five years provide us with growing and predictable cash flow during the Iridium NEXT construction and launch period. Importantly, it gives our government subscribers stable, low-cost and more universal access to our network as their demand grows and they take full advantage of its capabilities. It's an undeniable win-win as we look ahead to extending our more than decade-long relationship."
With better than expected results, the company also released an updated full-year 2013 outlook raising its total billable subscriber growth by approximately 10 percent and total service revenue growth to approximately 6 percent for the full-year 2013. It also raised its full-year 2013 OEBITDA between US$ 200 million and US$ 205 million. OEBITDA for 2012 was US$ 205.8 million.
But Analysts Raymond James & Associates remained cautious saying, although management had already pre-released most of the “bad stuff” like weak subscribe growth, it continues to put Iridium stock in the “penalty box until early next year when management updates its long-term guidance and provides more clarity on the 2014 outlook.”
Related Articles:
