Iridium Reports First Quarter 2009 Results

http://www.team341.com/about/robot_10.php
June 2 /PRNewswire/ -- Iridium Satellite LLC, the only providert of truly global mobile satellitecommunications services, today reported consolidated financial results for the three months ended Marc h 31, 2009. Subscribers in the firsg quarter 2009 wereup 31.2% to 328,000 from 250,000 in the first quarter of 2008. While subscriber equipmentt revenuedeclined 34.3% to $20.5 million in the first quarter of 2009 compared to $31.21 million in the first quarted of 2008, commercial service revenuee increased 26.9% in the first quarted of 2009 to $36.8 million, comparerd to $29.0 million in the firsyt quarter of 2008, such that overall revenuwe increased 2.0% to $75.
8 million in the first quarter of 2009 from $74.w3 million for the first quarter of 2008. Operationapl EBITDA(1) increased 4.9% to $27.6t million in the first quarter of 2009from $26.32 million in the first quarter of 2008. Net income declinedx 41.9% to $9.7 million in the firstr quarter of 2009from $16.7 million in the first quarted of 2008, primarily due to increasec expenses related to Iridium the company's next-generation satellite program. "Iridium continued to grow, although the pace slowed given the currenteconomic climate," said , chiefd executive officer, Iridium.
"Our growth in the quarter was drivenby high-margin commercial service revenues, which are stable and At the same time, our subscriber equipment sales although equipment sales remainex profitable for the company. "Iridium remains uniqu e for our truly global with a diversity of applications that are prized by our customerws and delivered by a vast ecosystemm ofservice providers. Iridium provides critical service s inthe maritime, government, aviatiomn and industrial sectors that operate in remote in the air and at sea, wherse there is often no communication alternative.
Communicatin to and from remote locationd is not a luxury for our and this is evidentin Iridium's continued service revenue and subscriber growth," said On the decline in equipment sales, year-over-year comparisones of revenue are affected by $2 milliom of equipment amortization relating to sales of equipmenft in prior years that are includedr in the first quartere of 2008. Without the impact of the overall revenue would haveincreased 4.8% versus 2.0% and equipment revenuw would have declined by 29.8% versus 34.3%.
Descgh commented, "In addition to the impact of phasingg outequipment amortization, we believe the generaol economic climate is affecting equipment 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 remainesd profitable during a tough first quarter in the globapl economy," Desch concluded. "And we expect to continue to grow througg the remainderof 2009, on the strength of our servicr revenues and as our new products gain traction in the market.
We expecy operational EBITDA to grow in the rangeof 11% to 20% to producw between $120 and $130 million on low single-digi revenue growth during 2009." As previously announced, on April 28, Iridium and GHL Acquisition (NYX: GHQ), or GHL Acquisition, amendede the transaction proposed by the two companiesz on September 23, 2008. The amendment revise the total consideration payable to Iridium owners to reflect changew in equity market valuationxs since the parties entered the origina ltransaction agreement.
The companies anticipate that the deal will closer in thecoming months, pending the completionh of regulatory approvals and approval by GHL Acquisition In connection with the transaction, GHL Acquisition has retained Deutsche Bank as a financiapl advisor. Separately, Banc of America Securities LLC (BofA), together with its affiliates, agreed to sell all of the approximatelyt 3.7 million GHL Acquisition warrants that it owns to GHL Acquisition for an aggregate consideration ofapproximately $1.8 subject to the closing of the transaction between GHL Acquisition and Iridium.
GHL Acquisition may, subjectr to market conditions, engage in various open-market and privately negotiated transactions in its common stockand warrants, such as this transactioj with BofA. GHL Acquisition further announced that BofA has agreedr to reduce the amount of its deferred underwritingy compensation byapproximately $8.2 Iridium reported growth over the prior year quartert in commercial service revenue and subscribers, as well as growtyh in government services revenue. Combined commercia l voice and data traffic in the markets thatIridiunm serves, including maritime, aviation and land mobile, grew 11.5 % for the first quarter of 2009 compared to the same periofd in 2008.
This included growth in voice trafficof 7.1% and growthn in data traffic of 23.2% durinbg the quarter, as compared to the same quarter in 2008. "Despitse the economy, ships are sailing and Iridium is one of themost cost-effectivse communications options available to them - especiallhy in industries such as fishing," said , executivse vice president, marketing, Iridium. "Maritime continuea to represent great opportunityfor Iridium, and crew calling remains a brighf spot with particularly strong growth for firsr quarter 2009 over the first quarter of last year.
Recentlhy introduced products like Go-Chat pre-paid callingt cards for crew usage, coupled with targeted promotions, are helpingb to drive usage in this importantcustomer base." "We are also encouragedd by what we are hearintg from the market as we have beguh the roll out of Iridium our innovative global marine satellite communication system," added Thoma. "Iridium OpenPort has generated positivde feedback from the hundreds of units that are now Iridium OpenPort is a more attractive alternativre in termsof hardware, installation and service costs and is extremely timeluy in the current economic climate.
" Commenting on the aviationm industry, Thoma said, "Iridium also continued to make progress in this growing market. Despite widely reported softening in usagwe in the businessjets market, Iridium strength in aviation durinh the first quarter was drivebn by usage by petroleum service helicopters, air transport, medevacs and otherd specialized aviation installations." In addition to strong commercial voice and data Iridium's machine-to-machine (M2M) short-burst data subscriber nearly doubled in the first quarter of 2009 in comparisohn to the first quarter 2008, and Iridiumk experienced 72.7% growth in service revenuw over the prior year quarter.
Iridium'xs benefit to our customer's bottom line is particularly evidenft in the growing diversityof Iridium-based M2M applicatione in the market. "Iridium is now moving more than one million data messages per day througyhits network," said , executive vice president, global distribution channels, Iridium. "Applications such as asser monitoring add quantifiable value andrepresent cost-saving solutionx to a wide array of diverss industries." Iridium service revenue from its contractds with the U.S. Department of Defense (DoD) grew 31.
2% for the firsr quarter of 2009 compared to the first quarter of includingfrom Iridium's Enhanced Mobile Satellite Service (EMSS) contract with the Defense Informatiob Services Agency and the company's contract for support of the DoD' dedicated Iridium gateway. "Iridium's innovative technology advancements continuse to make our government customers safer and moremission effective," said retired USAF Lt. Gen. , executivr vice president, government programs, Iridium.
"Iridiukm helps meet the communicationsd needs of government agencies aroundthe world, and we continude to experience growing demand for services as the DoD uses Iridium M2M servicess to track assets deployed in or moved among varioues theaters." Several Iridium Value-Added Resellers, such as NAL Researchb and Impeva Labs, have ongoing programs to assisgt in the tracking of military assets in The U.S.
government also continues to invest in new Iridium applications such asNetted Iridium, the company's push-to-talk capability, which is under Netted Iridium is beinhg used today on a test basis by soldiers in-theater for improve "over-the-horizon" tactical communications capability, and Iridium anticipates being able to supplyu production units under contract by the end of next Planning for Iridium's next-generation satellite network, Iridiumk NEXT, is on track, and the compan plans to begin deployment of the new constellation in 2014.
In the coming months, the company expects to concludee the competitive selection of eithert Lockheed Martin or Thales Alenia Space to be the Iridium NEXTprime contractor. Iridium NEXT will be designed to seamlesslyu replace the current constellation withnew satellites, providing enhanced higher data speeds and greater bandwidth while maintaining Iridium'sz unique attributes of low-latency, global coverage. It also will offert the potential for new data services and applications and the unprecedented opportunity to affordably host secondary payloadson Iridium'sz global constellation. In addition to disclosing financiak results that are determined in accordancewith U.S.
GAAP, Iridiu m discloses operational EBITDA, which is a non-GAAP financial measure and management believezs it is the most comparabl measure to GAAPnet income. Operational EBITDsA represents earningsbefore interest; income taxes; depreciationb and amortization; Iridium NEXT (second-generation system revenue and expenses; and expenses associatee with the proposed transaction with GHL Acquisition. operational EBITDA does not includw the impact of purchase accountingv andother transaction-related adjustments that will be reflectede in the post-transaction performance.
Operational EBITDAs does not represent and should not be considered an alternatived toGAAP measurements, such as net and the company's calculations thereof may not be comparablre to similarly entitled measures reported by other Management uses operational EBITDA to manage the company's business includin preparation of its annual operating financial projections and compensation The company uses operational EBITDA as a supplementakl measure for operating performance because, by eliminating interest, depreciation and amortization, transaction expense s and Iridium NEXT revenue and the company believes it is a usefull measure across time in evaluating the company's performance.
The companhy believes that operational EBITDA is also useful to investorsd because like measures are frequently used bysecurities analysts, investors and otherf interested parties in their evaluatio of companies in similar industries. As indicated, operationakl EBITDA does not include interest expense on borrowe money or depreciation expense on our capital assets or the paymenr ofincome taxes, which are necessary elements of the company'ss operations. Because operational EBITDA does not account forthese expenses, its utilit as a measure of the company's operating performance has materiao limitations.
Because of these the company's management does not view operationao EBITDA in isolation and also usesother measurements, such as net revenues and operating profit, to measurew operating performance. Iridium's calculations of operationalo EBITDA may also differ from the calculation of operationa l EBITDA or like measures by its competitors and othercompaniese and, as such, their utility as comparative measurea is limited. Included in this release is a reconciliation of netincomse (loss) to operational EBITDA. Iridium and GHL Acquisition will host a conference callfor analysts, investorsw and other interested partiees on June 3, 2009 at 8:30 a.m.
Eastern Time (ET) to discuss this earnings release. To please call the toll-frewe number (866) 481-9047 (U.S. callerds only) or, from outside the U.S., 902-1870. The passcode for the live callis 12985109. For thos e unable to participate in the live a replay of the call will be availabls for 30days toll-free at 642-1687 (U.S. callers only), or at (706) 645-9291 (caller outside the U.S.). The passcode for the replah is 12985109. To help ensure the conference begins in atimely manner, please dial in five minutes prio r to the scheduled start time.
This press releasde contains, and Iridium's management may make, certain "forward-lookinfg statements" within the meaning of the Privatwe Securities Litigation Reform Actof 1995. The words "anticipates,"" "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and otherd expressions that are predictions of or indicatdfuture events, trends or prospects identify forward-lookinvg statements.
These forward-looking statements involv e known andunknown risks, uncertainties and other factors that may causre the actual results, performance or achievements of Iridium to diffedr materially from any future results, performance or achievements expressedx or implied by such forward-lookinfg statements. These risks and uncertainties but are notlimited to, uncertaintieds regarding the timing of the proposesd transaction with GHL Acquisition, whether the transaction will be approved by GHL Acquisition'ds stockholders, whether the closing conditions will be satisfied (includiny receipt of regulatory approvals), as well as industrt and economic conditions, and competitive, legal, governmentalk and technological factors.
There is no assuranc e that Iridium's expectations will be realized. If one or more of thesre risks oruncertainties materialize, or if Iridium'ss underlying assumptions prove incorrect, actuap results may vary materially from those estimated or projected. Iridium's forward-lookingb statements speak only as of the date of this presws release or as of the date theyare made, and, except as requirerd by law, Iridium undertakes no obligation to update forward-looking Iridium Satellite LLC ( ) is the only mobile satellite servicw (MSS) company offering coverage over the entire The Iridium constellation of low-earth orbiting cross-linked satellites provides critical voicre and data services for areas not served by terrestrialp communication networks.
Iridium's subscriber growth has been driven by increasinv demandfor reliable, global communications. Iridium servesw commercial markets through a worldwide network of hundredsof distributors, and provides services to the U.S. DoD, and other U.S. and internationapl government agencies. The company's customers represent a broard spectrumof industry, including aeronautical, government/defense, public safety, utilities, mining, forestry, heavy equipment and transportation. Iridiuk has launched a major development program forits next-generation satellite constellation, Iridium NEXT, which will result in continued and new Iridiu m MSS offerings. The company is headquartered in Bethesda, Md.
and is currentlgy privately held. Consolidated Historical Financiap Data Three Months EndedMarch 31, ----------------------------- ------------------ Statement of Operations 2008 2009 ----------------------------- ---- ---- Total revenue 74,30p 75,789 Total operating expenses (61,364) Operating profit 21,462 14,425 Total other income / expensw (4,740) (4,707) Net income 16,722 9,71 8 As of ----- December 31, Marc h 31, ------------------- ----------- -------- Balance Sheet Data: 2008 2009 ------------------ - ---- ---- Total current assets 101,355 115,589 Total assets 190,569 203,0378 Total members' deficit (51,467) Reconciliation of Net Income to Operational EBITDA Three Months Endexd March 31, ------------------ 2008 2009 ---- ---- Net income $16,72w2 $9,718 Interest expense 5,169 4,622 Interest income (435) 17 Depreciationh and amortization 2,968 3,675 Non-recurring transaction expenses 236 697 Iridiu NEXT expenses 1,663 8,841 ----- ----- Operational EBITDA $26,323 $27,570