Orbcomm Feeling Bullish After a Strong Second Quarter

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PARIS — Satellite messaging service provider Orbcomm reported big increases in sales, gross profit and net subscriber additions for the three months ending June 30 despite the temporary loss of revenue from its ship identification business and said it should have at least two new satellites with this feature in orbit by the end of this year.

Fort Lee, N.J.-based Orbcomm said Aug. 9 that it had 660,000 billable subscriber communicators in service on June 30, up 3 percent from March 31 and a 12.3 percent increase from a year ago. The company added 18,000 satellite-only subscribers during the three months ending June 30, offset by 1,000 subscribers that were removed from the service following the acquisition of StarTrak Systems LLC.

StarTrak specializes in tracking and monitoring refrigerated vehicles. The acquisition helped Orbcomm’s revenue-per-subscriber figure in recent months because StarTrak customers generally pay more per month than Orbcomm’s other customers.

In a conference call with investors, Orbcomm Chief Executive Marc J. Eisenberg said that while the StarTrak acquisition had a one-time positive effect on subscriber revenue and profit, Orbcomm considers its performance in recent months as indicative of what the company can maintain over the long term.

Specifically, he said Orbcomm increased its revenue from its own satellite subscribers, independent of the StarTrak purchase. In addition, he said, the performance so far in 2011 does not include Orbcomm’s business in providing the U.S. Coast Guard and other maritime authorities with Automatic Information System (AIS) data on ship movement. This business will return once the company gets its new satellites in orbit.

Orbcomm’s AIS service had been providing some $700,000 in quarterly revenue before the spacecraft providing it failed in late 2010. Orbcomm’s core constellation of satellites, which remains healthy in orbit, does not have an AIS capability.

Eisenberg said a satellite Orbcomm is leasing from LuxSpace of Luxembourg to provide AIS ship identification for maritime authorities is scheduled for launch Sept. 25.

All of Orbcomm’s 18 second-generation satellites, under construction by Sierra Nevada Corp. of Sparks, Nev., include AIS capability. One or two of these satellites are scheduled for launch in late November aboard a Space Exploration Technologies Corp. (SpaceX) Falcon 9 rocket whose main mission will be to place SpaceX’s Dragon international space station logistics capsule into orbit.

The mission profile for this launch calls for the vehicle to drop off the Dragon capsule before reigniting its upper-stage engine to place the Orbcomm spacecraft into a different orbit. The drop-off point is not ideal for Orbcomm. It will force the satellite — whether one or two are launched is still undecided, Eisenberg said — to carry itself to its operational orbit, adding risk to the mission.

This maneuver will not be necessary for the remaining second-generation satellites, which will be launched as the Falcon 9’s principal payload and thus the rocket will be directed to the optimal drop-off point. The first dedicated Falcon 9 launch of the second-generation satellites is scheduled for the second half of 2012.

For the six months ending June 30, Orbcomm reported total revenue of $18.7 million, up 22.5 percent over the same period last year. EBITDA, or earnings before interest, taxes, depreciation and amortization, was $1.6 million, compared with a loss of $1.7 million a year ago.

 

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