Iridium released its third quarter 2014 financial results and conducted a conference call with financial analysts and investors. This is the transcript.
Executives
– Steve Kunszabo – Executive Director, IR
– Matt Desch – CEO
– Tom Fitzpatrick – CFO and CAO
Operator
Good day ladies and gentlemen and welcome to the Iridium Third Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.
I would now like to turn the conference over to Steve Kunszabo. Sir, you may begin.
Steve Kunszabo – Executive Director, IR
Good morning and thanks for joining us. I’d like to welcome you to our third-quarter 2014 earnings call. Joining me on the call this morning are CEO Matt Desch; and our CFO, Tom Fitzpatrick. Today’s call will begin with a discussion of our 2014 third quarter results, followed by Q&A.
Before I turn things over to Matt I’d like to caution all participants that our call this morning may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and include statements about our future expectations, plans, and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks which could cause actual results to differ from the forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission.
Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today; and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our expectations or views change.
During the call, we will also be referring to certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with Generally Accepted Accounting Principles. Please refer to today’s earnings release and the Investor Relations section of our web site for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.
With that, let me turn things over to Matt.
Matt Desch – CEO
Thanks Steve and good morning everyone. Let me start by noting that we posted our third consecutive quarter of solid growth. Total service revenue grew 8% and operational EBITDA grew 10% versus last year, with broad based contributions from our key commercial and government markets. We have raised our full year 2014 projections for both of these financial metrics, and are rapidly approaching our first scheduled Iridium NEXT launch.
I’ll spend my time with you today charting the developments around our major initiatives and programs, including Iridium NEXT and Aireon, and wrap up with a few thoughts on our key business lines. As I usually do, I’ll begin with the status of our current network, which is performing very well despite the fact that we replaced two satellite losses with in-orbit spares during the quarter. Overall, the network is working great and continues to deliver strong performance and an excellent user experience to our partners and customers.
By way of historical perspective, we have averaged about one satellite replacement annually over the last five years, so we are pretty much where I expected we’d be heading into next year, with one spare still available. The way our constellation works, allows it to be flexible and resilient in a way that no other commercial satellite network can. Thanks to that, and given the imminent launch of our next-generation system, we believe our constellation will provide an orderly and smooth transition to Iridium NEXT.
With about eight months to go before our first planned Iridium NEXT launch, I can report again that everything is still lined up to have the new system fully deployed in 2017. The capital program is tracking to budget, and we are passing important milestones at a pretty rapid clip.
