ORBCOMM Reports Better Than Expected 2Q 2013 Results

Rochelle Park, NJ, August 8, 2013 — Orbcomm Inc. reported on Wednesday better second quarter 2013 revenues rising 13.7 percent over prior year to $18.6 million resulting in net income of US$ 1.7 million or $0.04 per share, better than the analyst estimate of US$ 0.02.

Service revenues increased 8.9 percent over the prior year period to US$ 13.5 million, fuelled by increases in organic service revenues and from acquisitions. Company product sales rose to $5 million, which were 29.2 percent higher than prior year, driven by an increase in organic sales in Direct Channel, and Product Sales from the new acquisitions of GlobalTrak and MobileNet.

Orbcomm said its adjusted EBITDA for the second quarter of 2013 was US$ 3.9 million, which includes a $0.2 million in acquisition-related costs.

Net subscriber additions were 23,000 in the second quarter and include a one-time 2,000 subscriber increase from the acquisitions, bringing the total billable subscriber communicators to 800,000 at June 30, 2013, compared to 715,000 at the end of the second quarter last year. Billable subscribers increased 12 percent year-over-year.  

“We continue to focus on the growth and expansion of the company as a global end-to-end M2M solutions provider in new and existing markets, as evidenced by the recent launch of our new portfolio of state-of-the-art asset tracking and monitoring devices,” said Marc Eisenberg, Chief Executive Officer.

Eisenberg said second quarter total revenues of US$18.6 million exceeded the company’s previously announced expectations.

Service revenues were $13.5 million compared to US$ 12.4 million during the same period last year, an increase of $1.1 million, with growth in our existing business, AIS and $0.5 million from acquisitions. The year-over-year increase of 8.9 percent was impacted by a $0.2 million reduction related to the Yen exchange rate on a constant currency basis in the quarter.

Product sales were $5 million compared to US$ 3.9 million during the same period last year. The year-over-year increase of $1.1 million or 29.2 percent included a 17 percent increase of US$ 0.4 million in organic product sales in Direct Channel, and US$1.8 million of product sales from the acquisitions of GlobalTrak and MobileNet. This compensated for lower products sales from Japan of US$ 1.1 million in the quarter that includes an exchange rate impact of $0.2 million on a constant currency basis.

Analyst Raymond James & Associates noted that Orbcomm’s 2Q13 financial results that were ahead of expectations on most key metrics. It said Orbcomm’s revenue grew 14 percent y/y to US$18.6 million was 6 percent ahead of consensus of US$17.6 million, due primarily to better than anticipated hardware sales. Adjusted EBITDA of US$3.9 million was 16 percent ahead of consensus, and was only down 3 percent y/y despite $0.20 million of acquisition expenses. Excluding onetime M&A-related expenses, adjusted EBITDA was up 2 percent y/y, Raymond James said.

It added Orbcomm’s capital expenditure spending totalled US$ 9.7 million in the second quarter vs. $1.5 million in the year-ago period, reflecting milestone payments for the OG2 launch. As part of a US$ 200 million expansion program, Orbcomm is launching 18 Generation 2 satellites, dubbed OG2, on the SpaceX Falcon 9 launch vehicle.

On June 6, this year, Orbcomm launched a complete end-to-end telematics solution for the heavy equipment industry. Leveraging the strategic acquisition of MobileNet, Inc. as well as long-time partnerships with Quake Global, Inc. and Tier One wireless carriers, AT&T, Rogers, T-Mobile, and Vodafone, Orbcomm’s dual-mode offering combines the company’s global satellite and cellular connectivity with a robust web-based analytics platform in a single, low-cost monthly subscription as well as state-of-the-art hardware designed for the rigorous requirements of the heavy equipment market. 

Orbcomm along with its subsidiary MobileNet expects to start the first phase of a global telematics deployment with a major Korean OEM starting in Q4 2013. Orbcomm has designed a full telematics solution including dual mode connectivity, hardware and a customized web-based analytics platform.