ROCHELLE PARK, N.J., Feb. 26, 2020 (GLOBE NEWSWIRE) -- ORBCOMM Inc. (NASDAQ: ORBC), a global provider of Machine-to-Machine (M2M) and Internet of Things (IoT) solutions, today announced financial results for the fourth quarter and full year ended December 31, 2019.

“In the fourth quarter, we’re pleased with our progress in growing revenues and gross margins in both service and product, leading to strong Adjusted EBITDA and significant cash flow generation,” said Marc Eisenberg, ORBCOMM’s Chief Executive Officer. “In 2019, we’ve made great strides to strengthen our operations by consolidating platforms and financial systems resulting in greater efficiency and scalability across the Company. These improvements led to a record $63 million in Adjusted EBITDA and $30 million in Operating Cash Flow. We believe our new streamlined model, coupled with product innovations and a strong pipeline, position ORBCOMM to achieve greater levels of success across the business.”

Financial Results

Revenues

Total Revenues for the fourth quarter of 2019 were $69.7 million, up $3.3 million or 5.0% compared to the prior year period. As of December 31, 2019, total billable subscriber communicators were about 2.14 million as a result of approximately adding 73,000 net subscribers in the quarter, removing 425,000 subscribers due to the contract expiration of the AT&T agreement, and deactivating 85,000 subscribers related to our cost reduction initiative, which includes non-revenue generating devices that incur costs. Total Revenues for 2019 were $272 million compared to $276 million in 2018.

Service Revenues were $41.3 million in the fourth quarter of 2019, up $2.7 million or 6.9% compared to the same period last year. Recurring Service Revenues increased to $40.1 million in the fourth quarter, a 7.3% improvement compared to the prior year and up sequentially as the Company continued onboarding new subscribers. Other Service Revenues, which are comprised of installation services, professional services and software licenses, were $1.2 million in the quarter. For the full-year 2019, Service Revenues were $160.6 million, up $7 million or 4.6% compared to the prior year.

Product Sales were $28.4 million in the fourth quarter of 2019, up $0.7 million or 2.5% compared to the same period last year. For the full-year 2019, Product Sales were $111.4 million compared to $122.6 million in the prior year, which included hardware revenues from several large customer deployments.

Gross Margin ⁽¹⁾

GAAP Service Gross Margin, inclusive of depreciation and amortization expense, was 57.9% in the fourth quarter of 2019 compared to 56.7% in the prior year period. Non-GAAP Service Gross Margin, excluding depreciation and amortization expense, was 68.2% in the fourth quarter of 2019 compared to 67.7% in the prior year period. The year-over-year increase was predominantly due to recurring service revenue growth and reduced costs, and to a lesser degree the acceleration of deferred revenue associated with the expired AT&T contract. For the full-year 2019, Non-GAAP Service Gross Margin was 67.5%, a 210 basis point improvement over 2018.

GAAP Product Gross Margin, inclusive of depreciation and amortization expense, was 27.3% in the fourth quarter of 2019 compared to 24.9% in the prior year period. Non-GAAP Product Gross Margin, excluding depreciation and amortization expense, was 29.2% in the fourth quarter of 2019 compared to 27.5% in the same period last year. The year-over-year improvement was primarily due to a higher mix of new cost-reduced products shipped in greater volumes this quarter compared to the same quarter in 2018. For the full-year 2019, Non-GAAP Product Gross Margin was 29.7%, a 590 basis point improvement over 2018.

Operating Expenses

Operating Expenses for the fourth quarter of 2019 were $32.9 million, roughly flat to prior year. Excluding the favorable non-recurring net benefit in 2018 associated with the inthinc and Blue Tree acquisitions, operating expenses decreased about $1.5 million. For the full-year 2019, Operating Expenses were $135.8 million, an increase of about $4 million compared to the prior year. Excluding the favorable net benefits in both 2019 and 2018 associated with the inthinc and Blue Tree acquisitions, operating expenses increased $1 million dollars.

Net Income (Loss) and Earnings Per Share

Net Loss Attributable to ORBCOMM Inc. Common Stockholders for the fourth quarter of 2019 was $2.5 million, or $0.03 per share, compared to a Net Loss of $5.6 million, or $0.07 per share in the fourth quarter of 2018. For the full-year 2019, Net Loss Attributable to ORBCOMM Inc. Common Stockholders was $18.4 million, or $0.23 per share, compared to a Net Loss of $26.3 million, or $0.34 per share in 2018.

EBITDA and Adjusted EBITDA ⁽¹⁾

EBITDA for the fourth quarter of 2019 was $16 million compared to $14.1 million in the prior year period. EBITDA for the full year 2019 was $55.9 million compared to $47.2 million in 2018.

Adjusted EBITDA for the fourth quarter of 2019 was $16.9 million, an increase of $0.4 million compared to the prior year period. Excluding the favorable $1.5 million net benefit recognized in the fourth quarter of 2018, Adjusted EBITDA improved $1.9 million, or 12.5% over the prior year period. The Company’s Adjusted EBITDA Margin increased to 24.2%. The strong Adjusted EBITDA performance was primarily driven by higher service and product gross profits and cost reductions.

For the full-year 2019, the Company achieved record Adjusted EBITDA of $63.1 million, a 23% margin. Excluding the non-recurring favorable net benefits of $2 million in 2019 and $6 million in 2018 mostly associated with the inthinc and Blue Tree acquisitions, Adjusted EBITDA increased $10 million or over 19% versus 2018 on a comparable basis, with margin expansion of 400 basis points.

Balance Sheet & Cash Flow

As of December 31, 2019, Cash and Cash Equivalents totaled $54.3 million. Cash Flow from Operations totaled $9.3 million for the fourth quarter of 2019, driven primarily by favorable operating results. Capital Expenditures were $5.4 million in the quarter.

For the full-year 2019, Cash Flow from Operations was $30.1 million, an increase of $18.6 million compared to the prior year. Capital Expenditures in 2019 were $21.1 million.

2020 Outlook ⁽²⁾

For the first quarter of 2020, the Company expects Total Revenues to be similar to the prior year, which was $66 million and Adjusted EBITDA to be between $13 and $15 million.

The Company provides the following outlook for the full year listed in the table below.

On the conference call, the Company will discuss the 2020 outlook in greater detail.

⁽²⁾ The Company’s outlook for 2020 includes non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA Margin, which excludes charges or credits not indicative of core operations, which may include but not be limited to stock-based compensation expense, acquisition-related and integration costs, impairment loss, and other significant items that currently cannot be predicted. The exact amount of these charges or credits are not currently determinable, but may be significant. Accordingly, the Company is unable to provide equivalent reconciliations from GAAP to non-GAAP for these financial measures.

About ORBCOMM Inc.

ORBCOMM (Nasdaq: ORBC) is a global leader and innovator in the industrial Internet of Things industry, providing solutions that connect businesses to their assets to deliver increased visibility and operational efficiency. The company offers a broad set of asset monitoring and control solutions, including seamless satellite and cellular connectivity, unique hardware and powerful applications, all backed by end-to-end customer support, from installation to deployment to customer care. ORBCOMM has a diverse customer base including premier OEMs, solutions customers and channel partners spanning transportation, supply chain, warehousing and inventory, heavy equipment, maritime, natural resources, and government. For more information, visit www.orbcomm.com.