Lost satellite costs Orbcomm $12.7m
August 12, 2015
The loss of a satellite was the major contributor to the $12.2m losses reported by M2M-based asset tracking company Orbcomm for the second quarter of this year. The New Jersey company posted a £1.4m profit for the same period last year.
In June 2015, the company lost communications with one of the in-orbit OG2 satellites.
“While we are still trying to recover the satellite, due to the extended period without communications we are recording an impairment charge of $12.7m to write-off the net book value of this satellite as of June 30, 2015,” said a company statement. “Under the terms of our in-orbit insurance programme, this satellite would be the first of our three satellite deductible across both OG2 launch missions.”
The loss of this one satellite is not expected to have a material adverse effect on network communications services. Prior to losing communications, the satellite experienced two short outages. Since the other OG2 satellites have not exhibited this problem, the company believes the loss of communications is likely a workmanship or piece part issue, specific to this one satellite.
EBITDA (earnings before interest, taxes, depreciation and amortisation) for the second quarter of 2015 was a loss of $4.7m compared with a gain of $4.0m in the second quarter of 2014. This includes the $12.7m satellite loss and $1.1m in acquisition-related and integration costs. Adjusted EBITDA was $10.3m for the second quarter of 2015 compared with $5.1m in the second quarter of 2014, an increase of 102 per cent.
For the quarter, total revenues were up 85 per cent year-over-year to $44.9m. Service revenues were up 61 per cent over the prior year to $24.0m. Second quarter product sales of $20.9m were 122 per cent higher than the prior year.
Orbcomm completed the acquisitions of SkyWave and InSync in the first quarter of 2015, which had a positive impact on year-over-year comparisons. Organic revenue growth for the second quarter of 2015 was 20 per cent.
“Results for the second quarter were operationally very strong with record total revenues, significant organic revenue growth of 20 per cent, and good cost controls driving adjusted EBITDA to $10.3m at a margin of 23 per cent,” said Robert Costantini, chief financial officer of Orbcomm. “Excluding the satellite impairment loss and the acquisition-related and integration costs, we had net income – ex-items of $1.6m and basic EPS – ex-items of $0.02 per share.”
The company also announced that it had been selected by a large transportation OEM to provide a customised global telematics platform for refrigeration units. This OEM’s cold chain monitoring will provide its customers with a leading-edge, global wireless service comprised of a full suite of products including a new version of hardware, sensors and connectivity. Deployment in North America should start in the first quarter of 2016 with other regions following thereafter.”
“We’ve been extremely active in product development, creating a number of award-winning solutions,” said Marc Eisenberg, Orbcomm’s chief executive officer. “As these solutions have hit the market, it’s led to record quarters for revenues. We are shipping a significant amount of new product, which we expect to lead to strong service revenues in the second half of the year. We are pleased to see that our work at integrating our most recent acquisitions, and building scale across the business is making an impact on our business. Large deployments such as Hub, Doosan and now the large transportation OEM, are continuing to solidify our market leadership position in the global M2M industry.”