ORBCOMM Inc. (NASDAQ:ORBC) Files An 8-K Results of Operations and Financial ConditionItem 2.02
ORBCOMM Inc. (“ORBCOMM” or the “Company”) is providing in conjunction with an underwritten registered public offering of its shares its preliminary estimates of its total revenues, Adjusted EBITDA and net subscriber additions for the first quarter ended March31, 2018 and is furnishing such preliminary estimates with the Securities and Exchange Commission under Item 2.02 of this Current Report on Form 8-K.
The Company preliminarily estimates that for the first quarter ended March31, 2018, (i) its total revenues will be between $66million and $69million, (ii)its Adjusted EBITDA will be between $9million and $10million, and (iii)its net subscriber additions will be approximately 101,000. These estimates are preliminary, reflect the Company’s current good faith estimates, and are subject to the completion of the Company’s financial closing procedures as the Company prepares the condensed consolidated financial statements for the quarter. The Company’s actual results may differ materially from these preliminary estimates. Accordingly, investors should not place undue reliance on these preliminary estimates.
The information contained under Item 2.02 of this Current Report on Form8-Kshall not be deemed “filed” for purposes of Section18 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 (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing under the Securities Act or the Exchange Act. Notwithstanding the foregoing, such information is hereby filed and incorporated by reference into the Company’s registration statement on Form S-3 (Registration No.333-203186).
Non-GAAP Financial Measure
EBITDA and Adjusted EBITDA are “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, and Adjusted EBITDA are not performance measures calculated in accordance with GAAP and are therefore considered non-GAAP measures. A reconciliation table is presented below.
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 ORBCOMM’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 ORBCOMM’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.
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ORBCOMM also believes that Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, noncontrolling interests, impairment loss, non-capitalized satellite launch and in-orbit insurance, insurance recovery, and acquisition-related and integration costs, is useful to investors to evaluate ORBCOMM’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.
| Quarterended March31,2018(1)(2) | |||
| (in thousands) | |||
|
Adjustments to EBITDA |
|||
|
Net income attributable to ORBCOMM Inc. |
$ | (9,280)–(8,280 | ) |
|
Income tax expense |
~500 | ||
|
Interest income |
~(450 | ) | |
|
Interest expense |
~5,200 | ||
|
Debt extinguishment |
|||
|
Depreciation and amortization |
~11,250 | ||
|
EBITDA |
$ | 7,220 – 8,220 | |
|
Adjustments to adjusted EBITDA |
|||
|
Stock based compensation |
~1,350 | ||
|
Noncontrolling interests |
~30 | ||
|
Impairment loss |
|||
|
Acquisition related and integration costs |
~400 | ||
|
Adjusted EBITDA |
$ | 9,000–10,000 | |
| (1) | Amounts are approximate. |
| (2) | Based on management’s estimates and other factors. Actual results may differ materially from these preliminary estimates. |
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About ORBCOMM Inc. (NASDAQ:ORBC)
ORBCOMM Inc. is a provider of machine-to-machine (M2M) solutions, including network connectivity, devices and Web reporting applications. The Company’s M2M products and services are designed to track, monitor and manage security for a range of assets, such as trailers, trucks, rail cars, intermodal containers, generators, fluid tanks, marine vessels, diesel or electric powered generators (gensets), oil and gas wells, pipeline monitoring equipment, irrigation control systems, and utility meters, in the transportation and distribution, heavy equipment, oil and gas, maritime and government industries. It provides Automatic Identification System (AIS) data services to assist in vessel navigation and to improve maritime safety to government and commercial customers across the world. The Company provides its services using various network platforms, including its own constellation of approximately 40 low-Earth orbit (LEO) satellites and its accompanying ground infrastructure.