orbc-8k_20180503.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 3, 2018

 

ORBCOMM Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

001-33118

41-2118289

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

395 W. Passaic Street

Rochelle Park, New Jersey 07662

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (703) 433-6300

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 


 

Item 2.02.

Results of Operations and Financial Condition.

On May 3, 2018, ORBCOMM Inc. (“ORBCOMM” or the “Company”) released its earnings for the first quarter 2018 and is furnishing a copy of the earnings release to the Securities and Exchange Commission under Item 2.02 of this Current Report on Form 8-K. The press release is attached herewith as Exhibit 99 and is incorporated herein by reference. In addition, the Company will discuss its financial results during a webcast and teleconference call Thursday, May 3, 2018 at 8:30 a.m. (ET). To access the webcast and teleconference call, go to the Company’s website at www.orbcomm.com.

The information contained in Exhibit 99 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

ORBCOMM publicly reports its financial information in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). To facilitate external analysis of the Company’s operating performance, ORBCOMM also presents financial information that are considered “non-GAAP financial measures” under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission. Non-GAAP measures 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 those presented by other companies. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not performance measures calculated in accordance with GAAP and are therefore considered non-GAAP measures.  

 

EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest income (expense), loss on debt extinguishment, 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 Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, noncontrolling interests, impairment loss, and acquisition-related and integration costs, is useful to investors to evaluate the Company’s core operating results and financial performance because it excludes items that are significant non-cash or non-recurring expenses reflected in the Condensed Consolidated Statements of Operations. Adjusted EBITDA Margin equals Adjusted EBITDA divided by Total Revenues.  

Item 9.01.Financial Statements and Exhibits.

(d) Exhibits.

99

Press Release of the Company dated May 3, 2018.

2

 


 

EXHIBIT INDEX

 

Exhibit Number

 

Description of Exhibit

 

 

 

99

 

Press Release of the Company dated May 3, 2018.

 

3

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ORBCOMM Inc.

 

 

 

 

By

/s/ Robert G. Costantini

 

Name:

Robert G. Costantini

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

 

Date: May 3, 2018

 

4

 

orbc-ex99_7.htm

Exhibit 99

ORBCOMM ANNOUNCES FIRST QUARTER 2018 RESULTS

 

Total Revenues of $68.0 Million, Up 31% Compared to Last Year –

Margins Trending Higher for both Services and Products Over Q4 2017 –

Over 100,000 Net Subscriber Communicators Additions in Q1 2018 –

 

Rochelle Park, NJ, May 3, 2018 – ORBCOMM Inc. (NASDAQ: ORBC), a global provider of industrial Internet of Things (IoT) solutions, today announced financial results for the first quarter ended March 31, 2018.

The following financial highlights are in thousands of dollars.

 

 

Three Months Ended

 

 

March 31,

 

 

March 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

2017

 

Recurring Service Revenues

$

36,725

 

 

$

27,945

 

 

$

35,537

 

Other Service Revenues

$

1,267

 

 

$

1,567

 

 

$

3,772

 

Total Service Revenues

$

37,992

 

 

$

29,512

 

 

$

39,309

 

Product Sales

$

29,981

 

 

$

22,409

 

 

$

36,667

 

Total Revenues

$

67,973

 

 

$

51,921

 

 

$

75,976

 

Net Loss attributable to ORBCOMM Inc.

Common Stockholders

$

(10,086

)

 

$

(3,343

)

 

$

(7,519

)

Basic EPS

$

(0.13

)

 

$

(0.05

)

 

$

(0.10

)

EBITDA (1,3)

$

7,805

 

 

$

10,610

 

 

$

6,848

 

Adjusted EBITDA (2,3)

$

10,141

 

 

$

12,404

 

 

$

9,266

 

 

 

(1) EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest income (expense), loss on debt extinguishment, provision for income taxes and depreciation and amortization.

(2) Adjusted EBITDA is defined as EBITDA, adjusted for stock-based compensation expense, noncontrolling interests, impairment loss, and acquisition-related and integration costs.

(3) A table presenting EBITDA and Adjusted EBITDA, reconciled to GAAP Net Income (Loss), is among other financial tables at the end of this release.

 

 

“We’ve entered 2018 with a market-leading portfolio of industrial IoT products and services and a robust pipeline of opportunities, creating strong momentum,” said Marc Eisenberg, ORBCOMM’s Chief Executive Officer. “In the first quarter, we completed the JB Hunt deployment in record time and are thrilled to have them as a premier customer. We are pursuing multiple large opportunities that should close in the second half of the year.”

 

“Service margins improved in the first quarter of 2018 to 59.1% from 57.5% in the fourth quarter of 2017, helped by a 3.3% sequential increase in higher-margin Recurring Service Revenues of $1.2 million, while less profitable Other Service Revenues decreased $2.5 million as several large deployments are nearing completion,” said Robert Costantini, Chief Financial Officer of ORBCOMM.  “Product margins also improved in the first quarter to 21.6% from 12.7%. This trend of improving margins for both Service Revenues and Product Sales is expected to continue in 2018.”

 

 

1

 


Recent Highlights:

 

Financial Highlights

 

 

For Q1 of 2018, Total Revenues were $68.0 million, up 31% year-over-year. Service Revenues of $38.0 million were up 29%, and Product Sales rose 34% to $30.0 million.  

 

 

First Quarter 2018 Adjusted EBITDA of $10.1 million, representing 14.9% of Total Revenues, was $2.3 million lower than the same period last year. The decline was the result of higher operating costs, mostly from the acquisitions in the second half of 2017 as well as completing the large deployments.

 

 

Net subscriber communicator additions for ORBCOMM were over 100,000 in Q1 of 2018, increasing the total billable subscriber communicators to 2,126,000 at March 31, 2018, which compares to 1,766,000 at the end of March last year; a 20.4% increase year-over-year.

 

 

Business Highlights

 

On February 28, 2018, ORBCOMM announced that it had been selected by Armstrong Transportation to provide its industry-leading logistics tracking and monitoring solution for their trailer fleet. ORBCOMM’s end-to-end solution will provide wireless connectivity through its proprietary hardware and a web-based reporting platform for optimal fleet management.

 

 

ORBCOMM added 20 new Blue Tree customers, including deployments and evaluations, since completing the acquisition in October 2017, and expects to add 10 additional customers in the second quarter.

For more information on recent highlights and the Company’s business, operations and network, please visit www.orbcomm.com and see the Company’s annual report on Form 10-K.

 

Financial Results and Highlights

 

Revenues

 

Total Revenues of $68.0 million for the first quarter of 2018 were up $16.1 million or 30.9% compared to $51.9 million during the same period of 2017. 

 

Service Revenues of $38.0 million in the first quarter of 2018, were up $8.5 million or 28.7% over the prior year period that included organic growth of 7.9%. Recurring Service Revenue increased 31.4% to $36.7 million compared to the first quarter of 2017 and grew 3.3% sequentially over the fourth quarter of 2017.  Other Service Revenue was $1.3 million, down $0.3 million versus the first quarter of 2017. Other Service Revenue is comprised of installation services, professional services and software licenses.

 

 


Product Sales of $30.0 million grew $7.6 million or 33.8% compared to $22.4 million in the first quarter last year.  Most of the growth occurred in the Transportation, Marine, and Heavy Equipment markets. 

 

Revenue contribution margins for Service Revenues and Product Sales in the first quarter of 2018 were 59.1% and 21.6%, improving sequentially from 57.5% and 12.7%, respectively, in the fourth quarter of 2017.  

 

 

Cost of Revenues and Operating Expenses

 

Total Cost of Revenue and Operating Expenses for the first quarter of 2018 were $72.2 million compared to $52.3 million for the same period in 2017. The increase was due to higher revenues for Services and Products, and the acquisitions completed after the first quarter of 2017.

 

 

Loss Before Income Taxes, Net Income (Loss), and Earnings Per Share

 

Loss Before Income Taxes for the first quarter of 2018 was ($9.1) million versus ($2.7) million in 2017.  The quarterly Loss widened this year mostly due to higher costs from the 2017 acquisitions, and higher Interest Expense of ($2.8) million.  

 

Net Loss attributable to ORBCOMM Inc. Common Stockholders was ($10.1) million for the first quarter of 2018, compared to the Net Loss of ($3.3) million in the first quarter of 2017.  The increase in Net Loss is attributable to higher Depreciation & Amortization of $1.2 million, higher interest expense of $2.8 million, and higher operating costs, mostly associated with acquisitions completed after the first quarter of 2017.  Basic EPS was a loss of ($0.13) per share for the first quarter of 2018 versus a loss of ($0.05) per share in the first quarter of 2017, mainly due to higher operating expenses and increased Interest Expense.

 

EBITDA and Adjusted EBITDA

 

EBITDA for the first quarter of 2018 was $7.8 million compared to $10.6 million in 2017, a decrease of ($2.8) million.

 

Adjusted EBITDA was $10.1 million, or 14.9% of Total Revenues for the first quarter versus $12.4 million in 2017, a decrease of ($2.3) million. Adjusted EBITDA was down due to lower Service and Product margins and higher operating expenses, as well as other costs to operate the companies acquired in 2017.  

 

EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the Company to measure operating performance and the quality of earnings. 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, 2018, Cash and Cash Equivalents totaled $28.2 million, compared to $34.8 million at December 31, 2017, decreasing ($6.6) million, reflecting ($1.2) million of cash invested in operations that was mostly for increases in working capital, and cash invested in Capital Expenditures of ($5.6) million.

 


 

 

Investment Community Conference Call

 

ORBCOMM will host a conference call and webcast for the investment community this morning at 8:30 AM ET. Senior management will review the results, discuss ORBCOMM’s business, and address questions.  To access the call, US/CAN participants should dial 1-866-548-4713 at least ten minutes prior to the start of the call. International participants should dial 1-323-794-2093. 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 http://investors.orbcomm.com and then select “News & Events” to access the link to the call.  To listen to a replay of the conference call, please  Click Here. The replay will be available from 1:30 PM ET on May 3, 2018, through 1:30 PM ET on May 18, 2018.

 

About ORBCOMM Inc.

 

ORBCOMM (Nasdaq: ORBC) is a global leader and innovator in the industrial Internet of Things, providing solutions that connect businesses to their assets to deliver increased visibility and operational efficiency. The company offers a broad set of asset monitoring and control solutions, including seamless satellite and cellular connectivity, unique hardware and powerful applications, all backed by end-to-end customer support, from installation to deployment to customer care. ORBCOMM has a diverse customer base including premier OEMs, solutions customers and channel partners spanning transportation, supply chain, warehousing and inventory, heavy equipment, maritime, natural resources, and government. 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, estimates, objectives and expectations for future events, as well as, projections, business trends, and other statements that are not historical facts. Such forward-looking statements, are subject to known and unknown risks and uncertainties, some of which are beyond our control, which may cause our 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: demand for and market acceptance of our products and services and our ability to successfully implement our business plan; our dependence on our subsidiary companies (Market Channel Affiliates (“MCAs”)) and third party product and service developers and providers, distributors and resellers (Market Channel Partners (“MCPs”)) to develop, market and sell our products and services, especially in markets outside the United States; substantial losses we have incurred and may continue to incur; the inability to effect suitable investments, alliances and acquisitions, and even if we are able to make acquisitions, the failure to integrate and effectively operate the acquired businesses and the exposure to additional risks, such as unexpected costs, contingent or other liabilities, or weaknesses in internal controls, and issues related to non-compliance with domestic and foreign laws, particularly in acquisitions of foreign businesses; our dependence on significant customers for a substantial portion of our revenues, including key customers such as JB Hunt Transport Services, Inc., Walmart, Caterpillar Inc., Komatsu Ltd., Hub Group, Onixsat and Satlink S.L.; our ability to expand our business outside the United States, including risks related to the economic, political and other conditions in foreign countries in which we do business, including fluctuations in foreign currency exchange rates; our dependence on a few significant vendors,

 


service providers or suppliers, as well as the loss or disruption or slowdown in the supply of products and services these key vendors, service providers or suppliers, such as our SkyWave business’s dependence on its commercial relationship with Inmarsat plc and the services provided by Inmarsat plc, including the continued availability of Inmarsat plc’s satellites, the supply of our products produced by Sanmina Corporation, or the supply of application specific integrated circuits (ASICs) from S3 Group; competition from existing and potential telecommunications competitors, including terrestrial and satellite-based network providers, some of whom provide wireless network services to our customers in connection with our products and services; our reliance on intellectual property rights and the risk that we, our MCAs, our MCPs and our customers may infringe on the intellectual property rights of others; our 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 provide our services; legal proceedings; the failure of our system or reductions in levels of service due to technological malfunctions or deficiencies or other events, such as in-orbit satellite failures, reduced performance of our existing satellites, or man-made or natural disasters and other extreme events; rapid and significant technological changes, pricing pressures and other competitive factors; cybersecurity risks; the level of our indebtedness and the terms of our $250 million 8.0% senior secured note indenture and our revolving credit agreement, under which we may borrow up to $25 million, that could restrict our business activities or our ability to execute our strategic objectives or adversely affect our financial performance; and the other risks described in our filings with the Securities and Exchange Commission (“SEC”). For more detail on these and other risks, please see our Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report”), and other documents we file with the SEC. We undertake no obligation to publicly revise any forward-looking statements or cautionary factors, except as required by law.

 

Contacts

Investor Inquiries:

Financial and Trade Media:                         

Aly Bonilla

Alan Oshiki

Vice President, Investor Relations

Executive Vice President

ORBCOMM Inc.

The Abernathy MacGregor Group

703-433-6360

212-371-5999

bonilla.aly@orbcomm.com

aho@abmac.com

 

 


ORBCOMM Inc.

 

Condensed Consolidated Balance Sheets

 

(In thousands, except par value and share data)

 

(Unaudited)

 

 

March 31,

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

28,225

 

 

$

34,830

 

Accounts receivable, net of allowance for doubtful accounts of $1,083

   and $400, respectively

 

48,512

 

 

 

46,900

 

Inventories

 

48,250

 

 

 

42,437

 

Prepaid expenses and other current assets

 

19,798

 

 

 

18,692

 

Total current assets

 

144,785

 

 

 

142,859

 

Satellite network and other equipment, net

 

171,633

 

 

 

174,178

 

Goodwill

 

166,436

 

 

 

166,678

 

Intangible assets, net

 

96,058

 

 

 

99,339

 

Other assets

 

12,686

 

 

 

12,036

 

Deferred income taxes

 

161

 

 

 

104

 

Total assets

$

591,759

 

 

$

595,194

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

24,040

 

 

$

29,298

 

Accrued liabilities

 

43,329

 

 

 

33,016

 

Current portion of deferred revenue

 

4,631

 

 

 

6,263

 

Total current liabilities

 

72,000

 

 

 

68,577

 

Note payable - related party

 

1,400

 

 

 

1,366

 

Note payable, net of unamortized deferred issuance costs

 

245,325

 

 

 

245,131

 

Deferred revenue, net of current portion

 

3,304

 

 

 

2,459

 

Deferred tax liabilities

 

18,519

 

 

 

17,646

 

Other liabilities

 

11,889

 

 

 

13,619

 

Total liabilities

 

352,437

 

 

 

348,798

 

Commitments and contingencies

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

ORBCOMM Inc. stockholders' equity

 

 

 

 

 

 

 

Series A Convertible Preferred Stock, par value $0.001; 1,000,000 shares

   authorized; 37,544 shares issued and outstanding at March 31, 2018 and

   December 31, 2017

 

376

 

 

 

376

 

Common stock, par value $0.001; 250,000,000 shares authorized; 75,010,790 and

   74,436,579 shares issued at March 31, 2018 and December 31, 2017

 

75

 

 

 

74

 

Additional paid-in capital

 

413,866

 

 

 

411,298

 

Accumulated other comprehensive income

 

674

 

 

 

256

 

Accumulated deficit

 

(176,331

)

 

 

(166,245

)

Less treasury stock, at cost; 29,990 shares at March 31, 2018 and

   December 31, 2017

 

(96

)

 

 

(96

)

Total ORBCOMM Inc. stockholders' equity

 

238,564

 

 

 

245,663

 

Noncontrolling interest

 

758

 

 

 

733

 

Total equity

 

239,322

 

 

 

246,396

 

Total liabilities and equity

$

591,759

 

 

$

595,194

 

 


 

ORBCOMM Inc.

 

Condensed Consolidated Statements of Operations

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

Service revenues

 

$

37,992

 

 

$

29,512

 

Product sales

 

 

29,981

 

 

 

22,409

 

Total revenues

 

 

67,973

 

 

 

51,921

 

Cost of revenues, exclusive of depreciation and amortization

   shown below:

 

 

 

 

 

 

 

 

Cost of services

 

 

15,548

 

 

 

9,569

 

Cost of product sales

 

 

23,511

 

 

 

17,648

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

17,500

 

 

 

12,241

 

Product development

 

 

2,813

 

 

 

1,588

 

Depreciation and amortization

 

 

12,223

 

 

 

11,022

 

Acquisition - related and integration costs

 

 

606

 

 

 

228

 

Loss from operations

 

 

(4,228

)

 

 

(375

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

475

 

 

 

118

 

Other (expense) income

 

 

(167

)

 

 

5

 

Interest expense

 

 

(5,200

)

 

 

(2,426

)

Total other expense

 

 

(4,892

)

 

 

(2,303

)

Loss before income taxes

 

 

(9,120

)

 

 

(2,678

)

Income taxes

 

 

943

 

 

 

623

 

Net loss

 

 

(10,063

)

 

 

(3,301

)

Less: Net income attributable to the noncontrolling

   interests

 

 

23

 

 

 

42

 

Net loss attributable to ORBCOMM Inc.

 

$

(10,086

)

 

$

(3,343

)

Net loss attributable to ORBCOMM Inc.

   common stockholders

 

$

(10,086

)

 

$

(3,343

)

Per share information-basic:

 

 

 

 

 

 

 

 

Net loss attributable to ORBCOMM Inc.

   common stockholders

 

$

(0.13

)

 

$

(0.05

)

Per share information-diluted:

 

 

 

 

 

 

 

 

Net loss attributable to ORBCOMM Inc.

   common stockholders

 

$

(0.13

)

 

$

(0.05

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

74,729

 

 

 

71,424

 

Diluted

 

 

74,729

 

 

 

71,424

 

 


 

ORBCOMM Inc.

 

Condensed Consolidated Statements of Cash Flows

 

(In thousands)

 

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,063

)

 

$

(3,301

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Change in allowance for doubtful accounts

 

 

881

 

 

 

(36

)

Change in the fair value of acquisition-related contingent consideration

 

 

(1,508

)

 

 

(495

)

Amortization and write off of deferred financing fees

 

 

194

 

 

 

229

 

Depreciation and amortization

 

 

12,223

 

 

 

11,022

 

Stock-based compensation

 

 

1,707

 

 

 

1,524

 

Foreign exchange loss (gain)

 

 

176

 

 

 

(26

)

Deferred income taxes

 

 

779

 

 

 

155

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,155

)

 

 

(6,399

)

Inventories

 

 

(5,549

)

 

 

(151

)

Prepaid expenses and other assets

 

 

1,070

 

 

 

1,768

 

Accounts payable and accrued liabilities

 

 

2,076

 

 

 

(3,461

)

Deferred revenue

 

 

(578

)

 

 

(229

)

Other liabilities

 

 

(435

)

 

 

(98

)

Net cash (used in) provided by operating activities

 

 

(1,182

)

 

 

502

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(5,623

)

 

 

(5,645

)

Net cash (used in) investing activities

 

 

(5,623

)

 

 

(5,645

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

200

 

 

 

75

 

Net decrease in cash and cash equivalents

 

 

(6,605

)

 

 

(5,068

)

Beginning of period

 

 

34,830

 

 

 

25,023

 

End of period

 

$

28,225

 

 

$

19,955

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for

 

 

 

 

 

 

 

 

Interest

 

$

 

 

$

2,194

 

Income taxes

 

$

 

 

$

 

 


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

 

Three Months Ended

 

 

March 31,

 

 

2018

 

2017

 

(In thousands)

 

 

 

 

 

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss attributable to ORBCOMM Inc.

$

(10,086

)

$

(3,343

)

Income tax expense

 

943

 

 

623

 

Interest income

 

(475

)

 

(118

)

Interest expense

 

5,200

 

 

2,426

 

Depreciation and amortization

 

12,223

 

 

11,022

 

EBITDA

$

7,805

 

$

10,610

 

 

 

 

 

 

 

 

Adjustments to Adjusted EBITDA

 

 

 

 

 

 

Stock-based compensation

 

1,707

 

 

1,524

 

Noncontrolling interests

 

23

 

 

42

 

Acquisition-related and integration costs

 

606

 

 

228

 

Adjusted EBITDA

$

10,141

 

$

12,404

 

 

 

ORBCOMM publicly reports its financial information in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). To facilitate external analysis of the Company’s operating performance, ORBCOMM also presents financial information that are considered “non-GAAP financial measures” under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission. Non-GAAP measures 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 those presented by other companies. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not performance measures calculated in accordance with GAAP and are therefore considered non-GAAP measures. A reconciliation table is presented above.

 

EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest income (expense), loss on debt extinguishment, 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 Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, noncontrolling interests, impairment loss, and acquisition-related and integration costs, is useful to investors to evaluate the Company’s core operating results and financial performance because it excludes items that are significant non-cash or non-recurring expenses reflected in the Condensed Consolidated Statements of Operations. Adjusted EBITDA Margin equals Adjusted EBITDA divided by Total Revenues.