Iridium Announces 2021 Results; Company Issues 2022 Outlook
Iridium Communications Inc. (Nasdaq:IRDM) reported Q4 2021 results showing a net loss of $5.9 million, an improvement from $7.9 million in Q4 2020. Total revenue rose 6% to $155.9 million, with service revenue growing 8% to $126.7 million. OEBITDA increased 10% to $93.4 million, leading to a 60% OEBITDA margin. Full-year 2021 revenue reached a record $614.5 million, up 5% from 2020. The company ended Q4 with 1.723 million subscribers, reflecting a 17% year-over-year growth. Iridium anticipates service revenue growth of 5-7% and OEBITDA of $400-$410 million for 2022.
- Total revenue for Q4 increased by 6%, reaching $155.9 million.
- Service revenue grew by 8% year-over-year, totaling $126.7 million.
- OEBITDA for Q4 was $93.4 million, a 10% increase, with a margin of 60%.
- Full-year 2021 total revenue hit a record $614.5 million, up 5% from 2020.
- Total subscribers increased by 17% year-over-year to 1,723,000.
- Net loss for Q4 2021 was $5.9 million, despite improvements.
- Government service subscriber count decreased to 147,000, down from 152,000 year-over-year.
MCLEAN, Va., Feb. 17, 2022 /PRNewswire/ -- Iridium Communications Inc. (Nasdaq:IRDM) ("Iridium") today reported financial results for the fourth quarter and full-year 2021 and issued its full-year 2022 guidance. Net loss was
Iridium reported fourth-quarter total revenue of
The Company ended the quarter with 1,723,000 total billable subscribers, which compares to 1,476,000 for the year-ago period and is up from 1,690,000 for the quarter ended September 30, 2021. Total billable subscribers grew
Full-Year 2021 Iridium Business Highlights
For the full year, Iridium reported net loss of
"Iridium had another strong year in 2021 on the back of the best subscriber growth in Company history," said Matt Desch, CEO, Iridium. Desch added, "We achieved this growth even in the face of supply chain issues, while continuing to expand our product portfolio."
Commenting on Iridium's growing free cash flow and shareholder returns, Desch said, "Our pro forma free cash flow(1) grew by more than
Fourth-Quarter Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing
- Commercial service revenue was
$100.2 million , up10% from last year's comparable period due primarily to increased revenues from IoT and voice and data services. - Commercial voice and data subscribers were up
6% from the year-ago period to 370,000. Commercial voice and data average revenue per user ("ARPU") was$41 during the fourth quarter, compared to$40 in last year's comparable period. - Commercial IoT data revenue was
$28.9 million , up15% from the year-ago period. Commercial IoT subscribers grew24% from the year-ago period to 1,193,000 customers, driven by continued strength in consumer personal communications devices. Commercial IoT data ARPU was$8.20 in the fourth quarter, compared to$8.90 in last year's comparable period. The decrease in ARPU resulted from the effect of the growing proportion of personal communications subscribers within IoT, who typically utilize lower ARPU plans. - Commercial broadband revenue was
$11.5 million , up19% from$9.6 million in the year-ago period on increasing activations of Iridium Certus® broadband service. Commercial broadband ARPU was$292 during the fourth quarter, compared to$277 in last year's comparable period, reflecting an increasing mix of Iridium Certus broadband subscribers. - Iridium's commercial business ended the quarter with 1,576,000 billable subscribers, which compares to 1,324,000 for the prior-year quarter and is up from 1,541,000 for the quarter ended September 30, 2021. IoT data subscribers represented
76% of billable commercial subscribers at the end of the quarter, an increase from73% at the end of the prior-year period. - Hosted payload and other data service revenue was
$14.7 million in the fourth quarter compared to$14.4 million in the prior-year period.
Service – U.S. Government
Iridium's voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.
Under Iridium's Enhanced Mobile Satellite Services contract (the "EMSS Contract"), a seven-year,
- Government service revenue was
$26.5 million in the fourth quarter and reflected increased revenue from a contractual step up in the EMSS Contract on September 15, 2021. - Iridium's U.S. government business ended the quarter with 147,000 subscribers, which compares to 152,000 for the prior-year quarter and 149,000 for the quarter ended September 30, 2021. Subscriber counts continue to be negatively affected by the government's internal service pricing levels, created as a result of a shift in contract administration between agencies. Government voice and data subscribers increased
5% from the year-ago period to 65,000 as of December 31, 2021. Government IoT data subscribers decreased9% year-over-year and represented56% of government subscribers at year-end.
Equipment
- Equipment revenue was up
3% from the prior-year period, to$19.5 million during the fourth quarter, despite constraints on equipment shipments due to parts availability. The company also expects higher levels of equipment sales in 2022 than in 2021, even as the parts availability issues are forecast to continue during the year.
Engineering & Support
- Engineering and support revenue was
$9.7 million during the fourth quarter, down10% from the prior-year quarter, primarily due to the episodic nature of contract work for the U.S. government.
Capital expenditures were
During the quarter ended December 31, 2021, the Company repurchased approximately 976,000 shares of its common stock under its previously announced
2022 Outlook
The Company issued its full-year 2022 outlook and updated other elements of long-term guidance:
- Total service revenue growth between
5% and7% for full-year 2022. Total service revenue for 2021 was$492.0 million . - Full-year 2022 OEBITDA between
$400 million and$410 million . OEBITDA for 2021 was$378.2 million . - Negligible cash taxes in 2022. Cash taxes are expected to be negligible through approximately 2024 (previous outlook was for cash taxes to be negligible through 2023).
- Net leverage of approximately 3.0 times OEBITDA at the end of 2022, assuming the completion of the Company's
$300 million share repurchase authorization. Net leverage was 3.4 times OEBITDA at December 31, 2021.
(1) Non-GAAP Financial Measures & Definitions
In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company provides Operational EBITDA, Operational EBITDA margin and Pro Forma Free Cash Flow, which are non-GAAP financial measures, as supplemental measures to help investors evaluate the Company's fundamental operational performance. Operational EBITDA represents earnings before interest, income taxes, depreciation and amortization, share-based compensation expenses and, for periods presented through the first quarter of 2020 only, certain expenses associated with the construction of the Company's Iridium NEXT satellite constellation, primarily in-orbit insurance. The Company considers the loss on early extinguishment of debt to be financing-related costs associated with interest expense or amortization of financing fees, which by definition are excluded from Operational EBITDA. Such charges are incidental to, but not reflective of, the Company's day-to-day operating performance. The Company also presents Operational EBITDA expressed as a percentage of GAAP revenue, or Operational EBITDA margin. In addition, the Company presents Pro Forma Free Cash Flow, which subtracts non-cash hosted payload revenue, pro forma net interest, and normalized capital expenditures, working capital and cash taxes from Operational EBITDA. The Company uses Pro Forma Free Cash Flow to measure the Company's capacity for deleveraging and other shareholder-friendly actions. Operational EBITDA, along with its related measure, Operational EBITDA margin, and Pro Forma Free Cash Flow, do not represent, and should not be considered, alternatives to U.S. GAAP measurements such as net income or loss. In addition, there is no standardized measurement of Operational EBITDA or Pro Forma Free Cash Flow, and the Company's calculations thereof may not be comparable to similarly titled measures reported by other companies. The Company believes Operational EBITDA and Pro Forma Free Cash Flow are useful measures across time in evaluating the Company's fundamental core operating performance. Management also uses Operational EBITDA to manage the business, including in preparing its annual operating budget, debt covenant compliance, financial projections and compensation plans. The Company believes that Operational EBITDA and Pro Forma Free Cash Flow are also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries. As indicated, Operational EBITDA does not include interest expense on borrowed money, the payment of income taxes, amortization of the Company's definite-lived intangible assets, or depreciation expense on the Company's capital assets, which are necessary elements of the Company's operations. Since Operational EBITDA does not account for these and other expenses, its utility as a measure of the Company's operating performance has material limitations. Pro Forma Free Cash Flow further adjusts Operational EBITDA by subtracting pro forma net interest, cash from hosted payloads, and normalized amounts of capital expenditures, working capital and cash taxes. The actual amounts of these pro forma and normalized measures may vary from year to year. Due to these limitations, the Company's management does not view Operational EBITDA or Pro Forma Free Cash Flow in isolation, but also uses other measurements, such as net income (loss), revenues, operating profit and cash flows from operating activities, to measure operating performance. Please refer to the schedule below for a reconciliation of consolidated GAAP net loss to Operational EBITDA and Pro Forma Free Cash Flow and Iridium's Investor Relations webpage at www.iridium.com for a discussion and reconciliation of these and other non-GAAP financial measures. We do not provide a forward-looking reconciliation of expected full-year 2022 Operational EBITDA or Pro Forma Free Cash Flow guidance as the amount and significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts.
Iridium Communications Inc. | |||||||||
Supplemental Reconciliation of GAAP Net Loss to Operational EBITDA and Pro Forma Free Cash Flow | |||||||||
(In thousands) | |||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||
2021 | 2020 | 2021 | 2020 | % Change | |||||
GAAP net loss | $ (5,884) | $ (9,319) | |||||||
Interest expense, net | 15,893 | 22,693 | 73,906 | 94,271 | |||||
Income tax (benefit) expense | 473 | (9,967) | (19,569) | (32,910) | |||||
Depreciation and amortization | 76,165 | 75,914 | 305,431 | 303,174 | |||||
Iridium NEXT expenses, net | - | - | - | 149 | |||||
Share-based compensation | 6,781 | 4,086 | 26,879 | 16,714 | |||||
Loss on extinguishment of debt | - | - | 879 | 30,209 | |||||
Operational EBITDA | $ 93,428 | $ 378,207 | |||||||
Hosted Payload Cash Timing (1) | (14,000) | (22,000) | |||||||
Working Capital (2) | (8,000) | (8,000) | |||||||
Iridium Capital Expenditures (3) | (45,000) | (35,000) | |||||||
Net Interest (4) | (66,000) | (89,000) | |||||||
Cash Taxes (5) | - | - | |||||||
Pro Forma Free Cash Flow | $ 245,207 | ||||||||
(1) Hosted Payload adjusts OEBITDA for revenue recognition from Aireon and Harris hosting and prepaid data in excess of cash received in period | ||||||||||||||||
(2) Working Capital timing is expected to result in a net cash use averaging | ||||||||||||||||
(3) Booked Capital Expenditures excludes capitalized interest, which is included with Pro Forma Net Interest, and for illustrative purposes, 2021 capex is presented as an average of | ||||||||||||||||
(4) Pro Forma Net Interest for 2020 includes | ||||||||||||||||
(5) For illustrative purposes, Cash Taxes are assumed at |
Conference Call Information
As previously announced, the Company will host a conference call to discuss its results at 8:30 a.m. Eastern Time on Thursday, February 17, 2022. Callers should dial 1-412-902-6740 to access the call. The conference call will also be simultaneously webcast on Iridium's Investor Relations webpage at www.iridium.com. An archive of the webcast will be available following the live conference call.
About Iridium Communications Inc.
Iridium® is the only mobile voice and data satellite communications network that spans the entire globe. Iridium enables connections between people, organizations and assets to and from anywhere, in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. In 2019, the company completed a generational upgrade of its satellite network and launched its new specialty broadband service, Iridium Certus. Iridium Communications Inc. is headquartered in McLean, Va., U.S.A., and its common stock trades on the Nasdaq Global Select Market under the ticker symbol IRDM. For more information about Iridium products, services and partner solutions, visit www.iridium.com.
Forward-Looking Statements
Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding Iridium's expectations with respect to total service revenue growth, OEBITDA, net leverage and cash taxes for 2022; cash taxes over the longer-term; anticipated equipment sales for 2022 and reduced availability of equipment component parts; amount and timing of share repurchases, and expected revenues from its EMSS contract with the U.S. government. Forward-looking statements can be identified by the words "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and other expressions that are predictions or indicate future events, trends or prospects. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Iridium to differ materially 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, uncertainties regarding customer demand for Iridium's products and services, including demand from the U.S. government; Iridium's ability to maintain the health, capacity and content of its satellite constellation, and the development of and market for Iridium's products and services, as well as general industry and economic conditions, and competitive, legal, governmental and technological factors. Other factors that could cause actual results to differ materially from those indicated by the forward-looking statements include those factors listed under the caption "Risk Factors" in the Company's Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on February 17, 2022, as well as other filings Iridium makes with the SEC from time to time. There is no assurance that Iridium's expectations will be realized. If one or more of these risks or uncertainties materialize, or if Iridium's underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. Iridium's forward-looking statements are based on information available to it as of the date of this press release and speak only as of the date of this press release, and Iridium undertakes no obligation to update forward-looking statements.
Investor Contact: | Press Contact: |
Kenneth Levy | Jordan Hassin |
Iridium Communications Inc. | Iridium Communications Inc. |
+1 (703) 287-7570 | +1 (703) 287-7421 |
Iridium Communications Inc. | |||
Condensed Consolidated Statements of Operations | |||
(In thousands) | |||
Three Months Ended December 31, | |||
2021 | 2020 | ||
Revenue: | |||
Service revenue | |||
Commercial | $ 100,244 | $ 91,106 | |
Government | 26,500 | 25,750 | |
Total service revenue | 126,744 | 116,856 | |
Subscriber equipment | 19,464 | 18,921 | |
Engineering and support service | 9,679 | 10,730 | |
Total revenue | 155,887 | 146,507 | |
Operating expenses: | |||
Cost of services (exclusive of depreciation and amortization) | 25,236 | 22,076 | |
Cost of subscriber equipment sales | 12,133 | 11,824 | |
Research and development | 3,729 | 4,097 | |
Selling, general and administrative | 27,950 | 27,496 | |
Depreciation and amortization | 76,165 | 75,914 | |
Total operating expenses | 145,213 | 141,407 | |
Operating income | 10,674 | 5,100 | |
Other expense, net: | |||
Interest expense, net | (15,893) | (22,693) | |
Other expense, net | (192) | (299) | |
Total other expense, net | (16,085) | (22,992) | |
Loss before income taxes | (5,411) | (17,892) | |
Income tax benefit (expense) | (473) | 9,967 | |
Net loss | $ (5,884) | $ (7,925) | |
Operational EBITDA | $ 93,428 | $ 84,801 | |
Iridium Communications Inc. | |||
Condensed Consolidated Statements of Operations | |||
(In thousands) | |||
Year Ended December 31, | |||
2021 | 2020 | ||
Revenue: | |||
Service revenue | |||
Commercial | $ 388,104 | $ 362,208 | |
Government | 103,887 | 100,887 | |
Total service revenue | 491,991 | 463,095 | |
Subscriber equipment | 92,071 | 86,119 | |
Engineering and support service | 30,438 | 34,225 | |
Total revenue | 614,500 | 583,439 | |
Operating expenses: | |||
Cost of services (exclusive of depreciation and amortization) | 97,020 | 91,097 | |
Cost of subscriber equipment sales | 53,376 | 51,596 | |
Research and development | 11,885 | 12,037 | |
Selling, general and administrative | 100,474 | 90,052 | |
Depreciation and amortization | 305,431 | 303,174 | |
Total operating expenses | 568,186 | 547,956 | |
Operating income | 46,314 | 35,483 | |
Other expense, net: | |||
Interest expense, net | (73,906) | (94,271) | |
Loss on extinguishment of debt | (879) | (30,209) | |
Other income (expense), net | (417) | 33 | |
Total other expense, net | (75,202) | (124,447) | |
Loss before income taxes | (28,888) | (88,964) | |
Income tax benefit | 19,569 | 32,910 | |
Net loss | $ (9,319) | $ (56,054) | |
Operational EBITDA | $ 378,207 | $ 355,553 | |
Iridium Communications Inc. | |||||||||||
Summary Revenue and OEBITDA Highlights | |||||||||||
(In thousands) | |||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
Revenue | |||||||||||
Service revenue(1) | |||||||||||
Commercial service revenue | |||||||||||
Voice and data | $ 45,140 | $ 41,921 | |||||||||
IoT data(2) | 28,901 | 25,179 | 110,919 | 96,981 | |||||||
Broadband(3) | 11,459 | 9,620 | 42,990 | 35,959 | |||||||
Hosted payload and other data service(4) | 14,744 | 14,386 | 58,611 | 60,600 | - | ||||||
Total commercial service revenue | 100,244 | 91,106 | 388,104 | 362,208 | |||||||
Government service revenue(5) | 26,500 | 25,750 | 103,887 | 100,887 | |||||||
Total service revenue | 126,744 | 116,856 | 491,991 | 463,095 | |||||||
Subscriber equipment | 19,464 | 18,921 | 92,071 | 86,119 | |||||||
Engineering and support(6) | |||||||||||
Commercial | 1,635 | 1,265 | 4,613 | 4,529 | |||||||
Government | 8,044 | 9,465 | - | 25,825 | 29,696 | - | |||||
Total engineering and support | 9,679 | 10,730 | - | 30,438 | 34,225 | - | |||||
Total revenue | $ 155,887 | $ 146,507 | |||||||||
Operational EBITDA | |||||||||||
Operational EBITDA | $ 93,428 | $ 84,801 | |||||||||
Other | |||||||||||
Capital expenditures(7) | $ 14,131 | $ 9,422 | $ 42,147 | $ 38,689 | |||||||
Net debt(8) | |||||||||||
Cash, cash equivalents and marketable securities | $ 320,913 | $ 244,726 | |||||||||
Term Loan | |||||||||||
Deferred financing costs | (23,109) | (23,966) | |||||||||
Term Loan, net | |||||||||||
(1) Service revenue consists of primarily subscription-based services which often generate a long-term recurring revenue stream from subscribers. | |||||||||||
(2) IoT data service provides a two-way short burst data transmission between Iridium Communications Inc.'s network and a telemetry unit, which may be located, for example, on a container in transit or a buoy monitoring oceanographic conditions. | |||||||||||
(3) Broadband is comprised of Iridium OpenPort® and Iridium Certus. | |||||||||||
(4) Hosted payload and other services consist primarily of services that do not have traditional billable subscribers. Hosted payload services consist of hosting and data services to our payload customers, Aireon and Harris. Other services include primarily Iridium Communications Inc.'s one-way satellite timing, location, and authentication services (STL) which provides position, navigation and timing technology. | |||||||||||
(5) Government service revenue consists of voice and IoT data subscription-based services provided to agencies of the U.S. government through prime contracts. | |||||||||||
(6) Engineering and support includes maintenance services to the U.S. government's dedicated gateway and engineering services to assist customers in developing new technologies for use on Iridium Communications Inc.'s satellite system. | |||||||||||
(7) Capital expenditures based on cash spent in the respective period. | |||||||||||
(8) Net debt is calculated by taking the sum of the gross Term Loan B and gross drawn Revolving Facility, less cash, cash equivalents and marketable securities. |
Iridium Communications Inc. | |||||||||||
Subscriber Highlights | |||||||||||
(In thousands, except ARPU) | |||||||||||
As of December 31, | |||||||||||
2021 | 2020 | % Change | |||||||||
Billable Subscribers (1) (2) | |||||||||||
Commercial | |||||||||||
Voice and data, IoT data and Broadband service | |||||||||||
Voice and data | 370 | 350 | |||||||||
IoT data | 1,193 | 962 | |||||||||
Broadband(4) | 13.2 | 11.7 | |||||||||
Total commercial voice and data, IoT data and Broadband service | 1,576 | 1,324 | |||||||||
Government | |||||||||||
Voice and data and IoT data service | |||||||||||
Voice and data | 65 | 62 | |||||||||
IoT data | 82 | 90 | - | ||||||||
Total government voice and data and IoT data service | 147 | 152 | - | ||||||||
Total billable subscribers | 1,723 | 1,476 | |||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
Net Billable Subscriber Additions | |||||||||||
Commercial | |||||||||||
Voice and data. IoT data and Broadband service | |||||||||||
Voice and data | (2) | (2) | 20 | (2) | |||||||
IoT data | 37 | 38 | - | 231 | 160 | ||||||
Broadband | 0.2 | 0.3 | - | 1.5 | 0.9 | ||||||
Total commercial voice and data, IoT data and Broadband service | 35 | 36 | - | 252 | 159 | ||||||
Government | |||||||||||
Voice and data and IoT data service | |||||||||||
Voice and data | - | 1 | - | 3 | 5 | - | |||||
IoT data | (2) | 9 | - | (8) | 12 | - | |||||
Total government voice and data and IoT data service | (2) | 10 | - | (5) | 17 | - | |||||
Total net billable subscriber additions | 33 | 46 | - | 247 | 176 | ||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
ARPU (2) (3) | |||||||||||
Commercial | |||||||||||
Voice and data | $ 41 | $ 40 | $ 41 | $ 40 | |||||||
IoT data | $ 8.20 | $ 8.90 | - | $ 8.58 | $ 9.16 | - | |||||
Broadband | $ 292 | $ 277 | $ 288 | $ 266 | |||||||
(1) Subscribers as of the end of the respective period. | |||||||||||
(2) Billable subscriber and ARPU data is not applicable for Hosted payload and other data service revenue items and is excluded from presentation above. | |||||||||||
(3) Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. | |||||||||||
(4) Broadband is comprised of Iridium OpenPort®and Iridium Certus. |
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SOURCE Iridium Communications Inc.
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