ORBCOMM Announces First Quarter 2013 Results

  ORBCOMM Announces First Quarter 2013 Results

– Adjusted EBITDA of $3.2 million - Includes Acquisition-Related Costs of $0.4
                   million and Other Non-Recurring Items –

              – Net Income of $1.1 Million or $0.02 Per Share –

                      – Multiple New Customer Signings –

Business Wire

ROCHELLE PARK, N.J. -- May 09, 2013

ORBCOMM Inc. (Nasdaq: ORBC), a global satellite data communications company
specializing in two-way Machine-to-Machine (M2M) communications and solutions,
today announced financial results for the first quarter ended March 31, 2013.

The following financial highlights are in thousands of dollars, except per
share amounts.

                                                        Three months ended
                                                            March 31,
                                                            2013      2012
Service Revenues                                            $13,890   $11,531
Product Sales                                               $2,830    $4,348
Total Revenues                                              $16,720   $15,879
Net Income attributable to ORBCOMM Inc. Common              $1,092    $2,390
Net Income per Common Share - basic                         $0.02     $0.05
EBITDA ^(1,3)                                               $2,540    $3,809
Adjusted EBITDA ^(2,3)                                      $3,228    $4,209

^(1) EBITDA is defined as earnings attributable to ORBCOMM Inc. before
interest income (expense), provision for income taxes and depreciation and
^(2) Adjusted EBITDA is defined as EBITDA, adjusted for stock-based
compensation expense and noncontrolling interests.
^(3) A table presenting EBITDA and Adjusted EBITDA, reconciled to GAAP Net
Income, is among other financial tables at the end of this release.

Recent Highlights:

  *For the first quarter of 2013, Total Revenues increased 5% year-over-year
    to $16.7 million with Service Revenues increasing 20% to $13.9 million.
    The first quarter of 2013 included a positive back billing adjustment with
    a customer leading to higher than usual Service Revenues. Product Sales
    were lower compared to last year mostly due to a large sale to a Japanese
    OEM in the first quarter of 2012, and the effect of currency translation
    due to a less favorable U.S.$/Yen exchange rate this year compared to last
  *Adjusted EBITDA for the quarter was $3.2 million, and includes $0.4
    million in Acquisition-related costs related to the MobileNet and
    GlobalTrak acquisitions. ORBCOMM’s basic EPS is $0.02 for the first
    quarter of 2013 compared to basic EPS of $0.05 for the comparable period
    last year.
  *Net subscriber additions were 19,000 in the first quarter of 2013,
    bringing ORBCOMM to 777,000 billable subscriber communicators at March 31,
    2013, compared to 689,000 at the end of the first quarter last year. The
    base of billable subscribers increased 13% year-over-year.
  *On April 3, 2013, ORBCOMM announced it completed the acquisitions of
    substantially all of the assets of the GlobalTrak division of System
    Planning Corporation (GlobalTrak) and MobileNet, Inc. (MobileNet). The
    GlobalTrak and MobileNet acquisitions complement ORBCOMM’s growth strategy
    of expanding its end-to-end solutions portfolio into key vertical markets
    and geographic regions. The company’s initiative to develop end-to-end
    solutions within key vertical markets continues to build momentum.
  *On May 8, 2013, ORBCOMM announced that its state-of-the-art ReeferTrak®
    platform was selected by seven new domestic and international
    transportation and logistics companies including BP Logistics, Classic
    Carriers, Crowley Maritime Services, Direct Transport, Gangloff
    Industries, Integrated Airline Services and JASKO Enterprises. By
    leveraging the power of ReeferTrak®’s comprehensive temperature, fuel
    management, maintenance, and logistical application services, these
    customers can achieve improved compliance, increased efficiency and proven
    return on investment.
  *On March 26, 2013, ORBCOMM announced that the company is working with
    Kobelco Construction Machinery Co. Ltd. (KCM), Japan’s second largest
    manufacturer of hydraulic excavators, on a global telematics application.
    KCM will use ORBCOMM’s satellite network to track and monitor the
    location, status and performance of their construction equipment. KCM’s
    powerful on-board system will enable their customers to gain significant
    operating advantages and cost savings through enhanced visibility and
    better asset management of their machinery.
  *ORBCOMM continues its geographic market expansion by successfully
    obtaining authorizations for use of the ORBCOMM system in Belize, Cayman
    Islands, Trinidad and Tobago, Turks & Caicos and the British Virgin
    Islands. ORBCOMM can now provide service in these five countries and
    territories to existing global customers and is working with its local
    country representatives to recruit new VARs and introduce ORBCOMM-based
    M2M solutions to the marketplace.
  *On May 7, 2013, ORBCOMM announced that Berg Insight’s May 2013 Container
    Tracking and Security Report stated, “The satellite communication provider
    ORBCOMM has after the recent acquisitions of StarTrak, PAR LMS and
    GlobalTrak emerged as the largest vendor of intermodal container tracking
    solutions featuring GPRS or satellite communication.” Berg Insight
    estimates that “the number of tracking systems with GPRS or satellite
    communication for intermodal containers in active use is forecasted to
    grow at a compound annual growth rate of 49.1 percent from 137,000 units
    at the end of 2012 to 1.0 million by 2017.” Additionally, Berg Insight
    continued that, “There will be a continued strong focus on container
    transport security and increased supply chain visibility in the coming
    years, which will favor the container tracking market.”

For more information on recent highlights, please visit www.orbcomm.com.

"We continue to expand our customer portfolio with multiple new customer wins
across the business and to facilitate international deployments of M2M
solutions through five new global authorizations,” said Marc Eisenberg,
ORBCOMM's Chief Executive Officer. “Our vision and strategy are focused on the
right markets and the right solutions to expand our market leadership."

“ORBCOMM’s first quarter results included growth in services, but also some
revenue and expense adjustments of a one-time nature that impacts
profitability both higher and lower,” said Robert Costantini, Chief Financial
Officer of ORBCOMM. “We expect to see growth continue for the remainder of
2013 in recurring service revenue and product sales. The acquisitions of
MobileNet and GlobalTrak are off to a great start.”

Financial Results and Highlights


For the first quarter ended March 31, 2013, Service Revenues were $13.9
million compared to $11.5 million during the same period last year. The
year-over-year increase of 20% included a positive back billing adjustment
increasing Service Revenues, but also included increases in recurring Service
Revenues and AIS revenues. Service Revenue growth this quarter was negatively
impacted by the effect of currency translation due to a less favorable
U.S.$/Yen exchange rate this year compared to last year of $0.1 million.

Product Sales during the first quarter of 2013 were $2.8 million compared to
$4.3 million during the same period last year. The year-over-year decrease of
35% in Product Sales was driven by a significant hardware sale in the first
quarter of last year to a Japanese OEM customer, and the effect of currency
translation due to a less favorable U.S.$/Yen exchange rate this year compared
to last year of $0.1 million.

Total Revenues for the quarter ended March 31, 2013 were $16.7 million
compared to $15.9 million during the same period of 2012, an increase of 5% as
described above.

Costs and Expenses

Costs and Expenses for the first quarter of 2013 were $15.4 million compared
to $14.1 million during the same period in 2012. Costs of Product Sales for
the first quarter of 2013 were $2.2 million compared to $3.1 million for the
three months ended March 31, 2012, a decrease of 30% mainly due to lower
Product Sales.

Costs of Services, Product Development, and Selling, General and
Administrative Expenses were $12.8 million for the first quarter of 2013
compared to $10.6 million in the prior year first quarter, an increase of $2.2
million primarily related to non-recurring expenses and increased business
activity. The increase in costs were due to stock-based compensation, some
non-recurring expenses including costs to combine and relocate ORBCOMM’s New
Jersey offices to Rochelle Park, product warranty costs, as well as costs
typically concentrated in the first quarter for audit, legal and compliance.
Higher costs related to growth in the business include employee related costs,
product development and marketing expenses. Acquisition-related Costs were
$0.4 million in the quarter and comparable to last year’s first quarter.

Income Before Income Taxes, Net Income, and Earnings Per Share

Income Before Income Taxes for the first quarter of 2013 was $1.3 million
compared to $2.9 million for the first quarter of 2012. Income Before Income
Taxes was lower than prior year largely due to a $1.1 million gain on
extinguishment of debt recognized in the prior year period and several
non-recurring expenses incurred in the quarter.

Net Income attributable to ORBCOMM Inc. Common Stockholders was $1.1 million
for the three months ended March 31, 2013 compared to $2.4 million for the
similar three-month period in 2012. Basic Earnings Per Share were $0.02 for
the first quarter of 2013 versus $0.05 for the first quarter of 2012.

EBITDA and Adjusted EBITDA

EBITDA for the first quarter of 2013 was $2.5 million compared to $3.8 million
in the first quarter of 2012. Adjusted EBITDA for the first quarter of 2013
was $3.2 million, or lower by $1.0 million compared to $4.2 million in the
first quarter of 2012 that included a $1.1 million gain from the
extinguishment of debt. The year-over-year decline in EBITDA and Adjusted
EBITDA were largely due to the reasons highlighted above.

EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the
Company. Please see the financial tables at the end of the release for a
reconciliation of EBITDA and Adjusted EBITDA.

Balance Sheet & Cash Flow

At March 31, 2013, Cash and Cash Equivalents, Restricted Cash, and Marketable
Securities were $92.8 million, compared to $64.9 million at December 31, 2012,
increasing $27.9 million mainly due to the $45.0 million AIG term loan
proceeds less existing debt paid off as part of the transaction, and reduced
from payments made towards building and launching our next-generation

Cash used in operating activities was $0.4 million for the quarter. Total
ORBCOMM Inc. Stockholders’ Equity was $184.4 million at March 31, 2013.

Subsequent Events

As discussed above, ORBCOMM announced that it has completed the acquisition of
substantially all of the assets of the MobileNet, Inc., and GlobalTrak (a
division of Systems Planning Corp.) on April 1, 2013 and April 3, 2013,

Investment Community Conference Call

ORBCOMM will host a conference call and webcast for the investment community
this morning at 10:30 AM ET. Senior management will review the results,
discuss ORBCOMM’s business, and address questions.

To access the call, domestic participants should dial 1-877-941-2332 at least
ten minutes prior to the start of the call. International callers should dial
1-480-629-9723. To hear a live web simulcast or to listen to the archived
webcast following completion of the call, please visit the Company’s website
at www.orbcomm.com, select the “About us” tab, then the investor relations
tab, then select “Presentations and Webcasts,” to access the link to the call.
To listen to a telephone replay of the conference call, please dial
1-800-406-7325 domestically or 1-303-590-3030 internationally and enter
reservation identification number 4618371. The replay will be available from
approximately 12:00 PM ET on May 9, 2013, through 11:59 PM ET on May 16, 2013.

About ORBCOMM Inc.

ORBCOMM is a leading global satellite data communications company,
specializing in Machine-to-Machine (M2M) communications and solutions. Its
customers include Caterpillar Inc., Doosan Infracore America, Hitachi
Construction Machinery, and Hyundai Heavy Industries, Asset Intelligence (a
subsidiary of I.D. Systems, Inc.), Komatsu Ltd., Manitowoc Crane Companies,
Inc., and Volvo Construction Equipment among other industry leaders. By means
of a global network of low-earth orbit (LEO) satellites and accompanying
ground infrastructure, ORBCOMM’s low-cost and reliable two-way data
communication services track, monitor and control mobile and fixed assets in
our core markets: commercial transportation; heavy equipment; industrial fixed
assets; marine and homeland security. ORBCOMM based products are installed on
trucks, containers, marine vessels, locomotives, backhoes, pipelines, oil
wells, utility meters, storage tanks and other assets. ORBCOMM is an innovator
and leading provider of solution services for the refrigerated and
transportation markets. Under its ReeferTrak^®, GenTrak^TM, and CargoWatch^TM
brands, the Company provides customers with the ability to proactively
monitor, manage and remotely control their refrigerated and transportation
assets. Additionally, ORBCOMM provides Automatic Identification System (AIS)
data services for vessel tracking and to improve maritime safety to government
and commercial customers worldwide. ORBCOMM is headquartered in Rochelle Park,
New Jersey and has its network control center in Dulles, Virginia. For more
information, visit www.orbcomm.com.

Forward-Looking Statements

Certain statements discussed in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements generally relate to our plans,
objectives and expectations for future events and include statements about our
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Such forward-looking statements,
including those concerning the Company’s expectations, are subject to known
and unknown risks and uncertainties, which could cause actual results to
differ materially from the results, projected, expected or implied by the
forward-looking statements, some of which are beyond the Company’s control,
that may cause the Company’s actual results, performance or achievements, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These risks and uncertainties include but are not limited to:
ongoing global economic instability and uncertainty; substantial losses we
have incurred and may continue to incur; demand for and market acceptance of
our products and services and the applications developed by our resellers; we
may need additional capital to pursue our growth strategy; loss or decline or
slowdown in the growth in business from our key customers, such as Caterpillar
Inc., (“Caterpillar”), Komatsu Ltd., (“Komatsu”), Hitachi Construction
Machinery Co., Ltd., (“Hitachi”), and Asset Intelligence, a subsidiary of I.D.
Systems, Inc., other value-added resellers or VARs and international
value-added resellers or IVARs; loss or decline or slowdown in growth in
business of any of the specific industry sectors the Company serves, such as
transportation, heavy equipment, fixed assets and maritime; dependence on a
few significant customers; our acquisitions may expose us to additional risks;
litigation proceedings; technological changes, pricing pressures and other
competitive factors; the inability of our international resellers and
licensees to develop markets outside the United States; the inability to
obtain or maintain the necessary regulatory approvals or licenses for
particular countries or to operate our satellites; market acceptance and
success of our Automatic Identification System (“AIS”) business; satellite
launch and construction delays and cost overruns of our next-generation
satellites and launch vehicles; in-orbit satellite failures or reduced
performance of our existing satellites; significant liabilities created by
products we sell; the $45 million 9.5% Senior Notes that we issued on January
4, 2013 could restrict our business activities or our ability to execute our
strategic objectives or adversely affect our financial performance; the
failure of our system or reductions in levels of service due to technological
malfunctions or deficiencies or other events; our inability to renew or expand
our satellite constellation; inability to operate due to changes or
restrictions in the political, legal regulatory, government administrative and
economic conditions and developments in the United States and other countries
and territories in which we operate; and changes in our business strategy. In
addition, specific consideration should be given to various factors described
in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2012. The Company undertakes no obligation to publicly
revise any forward-looking statements or cautionary factors, except as
required by law.

Condensed Consolidated Balance Sheets
(in thousands, except share data)
                                                 March 31,    December 31,
                                                    2013          2012
Current assets:
Cash and cash equivalents                           $ 33,948      $  34,783
Marketable securities                                 56,696         27,969
Accounts receivable, net of allowances for            12,903         10,703
doubtful accounts of $337 and $300
Inventories                                           3,134          3,748
Prepaid expenses and other current assets             1,684          1,484
Deferred income taxes                                164          164     
Total current assets                                  108,529        78,851
Satellite network and other equipment, net            111,352        101,208
Goodwill                                              14,740         14,740
Intangible assets, net                                7,535          7,791
Restricted cash                                       2,195          2,195
Deferred income taxes                                 400            398
Other assets                                         3,111        1,583   
Total assets                                        $ 247,862    $  206,766 
Current liabilities:
Accounts payable                                    $ 3,407       $  2,899
Accrued liabilities                                   8,232          11,271
Current portion of deferred revenue                  2,456        2,394   
Total current liabilities                             14,095         16,564
Note payable - related party                          1,457          1,503
Notes payable                                         45,000         3,398
Deferred revenue, net of current portion              2,060          1,959
Deferred tax liabilities                              462            397
Other liabilities                                    623          557     
Total liabilities                                    63,697       24,378  
Commitments and contingencies
ORBCOMM Inc. stockholders' equity
Preferred Stock Series A, par value $0.001;
1,000,000 shares authorized;
151,954 and 161,359 shares issued and                 1,518          1,612
Common stock, par value $0.001; 250,000,000
shares authorized; 46,983,562 and
46,783,568 shares issued                              47             47
Additional paid-in capital                            249,340        248,469
Accumulated other comprehensive income                450            633
Accumulated deficit                                   (66,864 )      (67,956 )
Less treasury stock, at cost, 29,990 shares
at March 31, 2013 and
December 31, 2012                                    (96     )     (96     )
Total ORBCOMM Inc. stockholders' equity               184,395        182,709
Noncontrolling interests                             (230    )     (321    )
Total equity                                         184,165      182,388 
Total liabilities and equity                        $ 247,862    $  206,766 

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
                                                       Three months ended
                                                       March 31,
                                                       2013         2012
Service revenues                                       $ 13,890     $ 11,531
Product sales                                           2,830      4,348  
Total revenues                                          16,720     15,879 
Costs and expenses ^(1):
Costs of services                                        5,633        4,706
Costs of product sales                                   2,174        3,103
Selling, general and administrative                      6,361        5,341
Product development                                      793          559
Acquisition-related costs                               404        423    
Total costs and expenses                                15,365    14,132 
Income from operations                                   1,355        1,747
Other income (expense):
Interest income                                          17           27
Other income (expense)                                   (11    )     47
Gain on extinguishment of debt, net of                   -            1,062
Interest expense                                        (46    )    (24    )
Total other income (expense)                            (40    )    1,112  
Income before income taxes                               1,315        2,859
Income taxes                                            145        394    
Net income                                               1,170        2,465
Less: Net income attributable to the                    62         56     
noncontrolling interests
Net income attributable to ORBCOMM Inc.                $ 1,108     $ 2,409  
Net income attributable to ORBCOMM Inc. common         $ 1,092     $ 2,390  
Per share information-basic:
Net income attributable to ORBCOMM Inc. common         $ 0.02      $ 0.05   
Per share information-diluted:
Net income attributable to ORBCOMM Inc. common         $ 0.02      $ 0.05   
Weighted average common shares outstanding:
Basic                                                   46,837     46,351 
Diluted                                                 48,143     46,898 
(1) Stock-based compensation included in costs
and expenses:
Costs of services                                      $ 67         $ 44
Costs of product sales                                   23           8
Selling, general and administrative                      496          271
Product development                                     40         21     
                                                       $ 626       $ 344    

Condensed Consolidated Statements of Cash Flows
(in thousands)
                                                     Three months ended
                                                     March 31,
                                                     2013          2012
Cash flows from operating activities:
Net income                                           $ 1,170       $ 2,465
Adjustments to reconcile net income to net
(used in) provided by operating activities:
Change in allowance for doubtful accounts              37            (14     )
Change in the fair value of                            -             30
acquisition-related contingent consideration
Amortization of the fair value adjustment
related to warranty liabilities acquired               (9      )     -
through acquisitions
Depreciation and amortization                          1,258         1,009
Stock-based compensation                               626           344
Foreign exchange (gains) losses                        11            (47     )
Amortization of premium on marketable                  125           176
Increase in fair value of indemnification              (135    )     (112    )
Deferred income taxes                                  63            85
Gain on extinguishment of debt and accounts            -             (1,214  )
Amortization of transition shared services             -             49
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable                                    (2,267  )     (288    )
Inventories                                            599           455
Prepaid expenses and other assets                      (175    )     107
Accounts payable and accrued liabilities               (1,892  )     (1,511  )
Deferred revenue                                       171           181
Other liabilities                                     66          (20     )
Net cash (used in) provided by operating              (352    )    1,695   
Cash flows from investing activities, net of
Capital expenditures                                   (11,940 )     (7,113  )
Purchases of marketable securities                     (48,762 )     (14,511 )
Proceeds from maturities of marketable                 19,910        13,420
Change in restricted cash                              -             1,025
Acquisition of net assets of LMS                      -           (4,000  )
Net cash used in investing activities                 (40,792 )    (11,179 )
Cash flows from financing activities
Proceeds received from issuance of $45,000             45,000        -
Senior Notes
Cash paid for debt issuance costs                      (1,059  )     -
Proceeds received from exercise of stock               161           -
Purchase of noncontrolling ownership
interests in Satcom
International Group plc                                -             (192    )
Repayment of Satcom notes payable                      -             (253    )
Principal payments of note payable                     (3,450  )     (63     )
Principal payments of capital leases                  (75     )    -       
Net cash provided by (used in) financing              40,577      (508    )
Effect of exchange rate changes on cash and           (268    )    (334    )
cash equivalents
Net decrease in cash and cash equivalents              (835    )     (10,326 )
Cash and cash equivalents:
Beginning of period                                   34,783      35,061  
End of period                                        $ 33,948     $ 24,735  
Supplemental disclosures of cash flow
Cash paid for
Interest                                             $ 1,033      $ 56      
Income taxes                                         $ 787        $ 753     
Supplemental schedule of noncash investing
and financing activities
Noncash investing and financing activities:
Capital expenditures incurred not yet paid           $ 952        $ 581     
Stock-based compensation included in capital         $ 25         $ 18      
Series A convertible preferred stock                 $ 16         $ 19      
dividend paid in-kind
Unpaid debt issuance costs included in               $ 450        $ -       
accrued liabilities
Issuance of common stock in connection with          $ -          $ 2,123   
the acquisition of LMS
Issuance of common stock in connection with
the purchase of Satcom's
shares from noncontrolling ownership                 $ -          $ 1,000   
AIS satellites accounted for as a capital            $ -          $ 903     
Acquisition-related contingent consideration         $ -          $ 740     

The following table reconciles our Net Income attributable to ORBCOMM Inc. to
EBITDA and Adjusted EBITDA for the periods shown:

                                                Three months ended
                                                March 31,
(in thousands)                                  2013      2012
Net Income attributable to ORBCOMM Inc.         $1,108      $2,409
Net interest (income) expense                   29          (3)
Provision for income taxes                      145         394
Depreciation and amortization                   1,258       1,009
EBITDA                                          2,540       3,809
Stock-based compensation                        626         344
Noncontrolling interests                        62          56
Adjusted EBITDA                                 $3,228      $4,209

EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest
income (expense), provision for income taxes and depreciation and
amortization. ORBCOMM believes EBITDA is useful to its management and
investors in evaluating operating performance because it is one of the primary
measures used to evaluate the economic productivity of the Company’s
operations, including its ability to obtain and maintain its customers, its
ability to operate its business effectively, the efficiency of its employees
and the profitability associated with their performance. It also helps
ORBCOMM’s management and investors to meaningfully evaluate and compare the
results of the Company’s operations from period to period on a consistent
basis by removing the impact of its financing transactions and the
depreciation and amortization impact of capital investments from its operating
results. In addition, ORBCOMM management uses EBITDA in presentations to its
board of directors to enable it to have the same measurement of operating
performance used by management and for planning purposes, including the
preparation of the annual operating budget. The Company also believes that
EBITDA, adjusted for Stock-based compensation expense, and Noncontrolling
interests is useful to investors to evaluate the Company’s core operating
results and financial performance and its capacity to fund capital
expenditures, because it excludes items that are significant non-cash expenses
reflected in the Condensed Consolidated Statements of Operations. EBITDA and
Adjusted EBITDA are not performance measures calculated in accordance with
accounting principles generally accepted in the United States, or GAAP. While
ORBCOMM considers EBITDA and Adjusted EBITDA to be important measures of
operating performance, they should be considered in addition to, and not as a
substitute for, or superior to, Net Income or other measures of financial
performance prepared in accordance with GAAP and may be different than EBITDA
and Adjusted EBITDA measures presented by other companies. A reconciliation
table is presented above.


Investor Inquiries:
Robert Costantini, 703-433-6305
EVP and Chief Financial Officer
Media Inquiries:
The Abernathy MacGregor Group
Chuck Burgess, 212-371-5999
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