[Satellite TODAY Insider 11-11-11] Satellite company Orbcomm reported a 59 percent, year-over-year increase in its 2011 third-quarter adjusted EBITDA and project that its new AIS satellites would start to generate revenue in the near future, according to the company’s latest financial results issued Nov. 10.
Orbcomm’s partner LuxSpace successfully launched the VesselSat-1 micro AIS satellite to revamp their AIS business and diversify the company’s revenue stream. During a conference call, Orbcomm management confirmed that AIS revenues should reach about $2 million very shortly. Some analysts predict this could happen as soon as late 2012 and that Orbcomm’s AIS business has the potential to generate between $10 million and 15 million annually with a 90 percent EBITDA contribution margin.
Raymond James Analyst Chris Quilty forecasts Orbcomm’s adjusted EBITDA to grow 151 percent in 2012, driven by accelerating subscriber growth, the company’s StarTrak acquisition, expanded AIS revenues, and the launch of several new satellites. “We reiterate our outperform rating on Orbcomm as the company’s third-quarter EBITDA tops forecasts by 17 percent. Its third quarter adjusted EBITDA growth is the second-highest level in company history. The strength was primarily a function of better-than-expected service revenues – up 46 percent from the same period last year,” Quilty said in a research report.
Orbcomm added about 20,000 subscribers during the quarter – a 22 percent net addition gain compared to last year, representing the company’s best performance in three years. Orbcomm management said the strength was mostly attributable to OEM demand, which has also contributed to higher ARPUs. Orbcomm added more than 15,000 satellite subscribers in the quarter – the company’s second best quarter in nearly three years, but is still slightly below Quilty’s forecast of 18,000 net additions.
“Looking ahead, Orbcomm service revenues, which grew 46 percent in the latest quarter compared to last year, should benefit from a recent acceleration in StarTrak hardware shipments. Those shipments rose by double-digit percentages sequentially. The company should also benefit from upwardly trending ARPU on a mix of StarTrak and OEM services,” said Quilty.
Orbcomm signed a $117 million contract with Sierra Nevada Corp (SNC) in 2008 to construct 18 next-generation satellites. In 2009, the company entered into a $46.6 million fixed-price contract with SpaceX to launch these satellites beginning in early 2012 and extending through 2014. Orbcomm made milestone payments to SNC and SpaceX totaling $52.2 million through the end of 2010, with a $111 million remaining balance.
