Orbcomm Reports Sharply Higher Revenue

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PARIS — Satellite machine-to-machine messaging service provider Orbcomm on March 14 reported sharply higher revenue and a doubling of gross profit for 2012 and said eight satellites of its second-generation constellation are on track for a September launch.

Rochelle Park, N.J.-based Orbcomm also announced the acquisition of two companies for a combined $6.25 million in cash and $1.5 million in Orbcomm stock, and said both will bring new subscribers to Orbcomm and add at least $5 million to $7 million in annual revenue starting late this year.

In a conference call with investors, Orbcomm Chief Executive Marc J. Eisenberg said Boeing Co. has begun producing payloads for Orbcomm’s second-generation constellation at a rate of two per month. The payloads are shipped to Sierra Nevada Corp. of Sparks, Nev., which has completed the satellites’ platforms and will mate them to the payload modules.

The eight satellites are scheduled for launch in September aboard a Falcon 9 rocket operated by Space Exploration Technologies Corp. of Hawthorne, Calif.

In addition to providing higher-speed service, the second-generation satellites — there are 17 in all following the loss of a prototype in a Falcon 9 launch anomaly in October — are all equipped with Automatic Identification System (AIS) maritime surveillance terminals.

Orbcomm has debuted its AIS business with two small satellites it purchased to keep the AIS business line active following the in-orbit failure of previous Orbcomm AIS-equipped spacecraft.

Eisenberg said Orbcomm’s AIS revenue totaled $645,000 in the last three months of 2012 and $2.1 million for the full year. He said this figure should rise substantially in 2013 since the company signed eight new AIS customers, and issued 22 AIS licenses, in late 2012.

Orbcomm’s AIS satellites, combined with terrestrial sources, relay data on 100,000 ships per day. But with only two satellites, data from these vessels is updated only twice a day. Once the second-generation constellation is fully deployed, ship data — ship identification, cargo, heading and destination — will be refreshed every 15 minutes, he said.

Orbcomm and Com Dev of Canada’s majority-owned exactEarth are both building global AIS capabilities using small satellites in low Earth orbit.

Eisenberg said Orbcomm’s recent contract with heavy-equipment manufacturer Sumitomo of Japan is an example of how much of Orbcomm’s addressable market remains to be captured. Sumitomo has contracted with Orbcomm to install satellite messaging terminals on the company’s heavy-equipment fleets around the world to deliver engine data.

Sumitomo is an existing Orbcomm customer, but up to now had limited its satellite messaging business to Japan.

Eisenberg said there are some 25 original equipment manufacturers, each generating $1 billion a year in heavy-equipment sales, which do not have their own in-house telematics provider. All should be targets for Orbcomm, especially following the company’s purchase of GlobalTrak from System Planning Corp. of Arlington, Va. GlobalTrak delivers worldwide satellite and terrestrial data for logistics and security operations to military, civil government and commercial customers.

Orbcomm is purchasing GlobalTrak for $2.75 million in cash. Orbcomm announced on the same day its purchase of MobileNet, which provides monitoring services for the railroad industry, for $3.5 million in cash and $1.5 million in Orbcomm stock.

The MobileNet purchase will bring some 3,900 new subscribers to Orbcomm. But Eisenberg said these new subscribers are expected to generate $5 million in revenue over three years — an example of the extreme diversity of customers inside Orbcomm’s total base of 759,000 subscribers as of Dec. 31. Some of these subscribers generate $1 a month in revenue, others up to $180 per month.

For the 12 months ending Dec. 31, Orbcomm reported revenue of $64.5 million, up 39 percent from 2011. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was $16.7 million, more than double 2011’s figure. The company reported net income of $8.7 million, compared to a marginal loss in 2011.