Orbcomm reports first quarter loss, tops revenue estimates

Rochelle Park, New Jersey-based Orbcomm posted total revenue of $66.2 million during the first quarter of 2020, compared to $66 million during the same period a year ago, topping several Wall Street estimates.

Service revenues were $40.5 million in the first quarter, up $1.5 million or 3.9%, compared to the same period last year. Product sales decreased 4.8% year-over-year, from $27 million in the first quarter in 2019, to $25.7 million in the first quarter of 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2020 was $11.8 million compared to $12.7 million in the prior year period, a decrease of 7%.

Orbcomm operates in transportation and distribution, heavy equipment, industrial fixed assets, oil and gas, maritime, mining, and government. Orbcomm also owns telecommunications infrastructure, including low-Earth orbit satellites and accompanying ground infrastructure.

Orbcomm employs around 800 people around the world.

Eisenberg said Orbcomm has not “reduced our U.S. employee count” due to the coronavirus pandemic. Orbcomm is considered an essential business by the U.S. government, and has not had to shut down any of its facilities during the stay-at-home work order. 

Orbcomm is also considered an essential business in Mexico, where most of its products are produced. 

“We are open in Mexico, continuing to produce goods,” Eisenberg said. 

2020 Guidance

Due to the uncertainty surrounding the level of business disruption across the multiple markets Orbcomm serves as a result of the spread of COVID-19, company officials said they are withdrawing their previously announced full-year 2020 outlook.  

“We do have some visibility into the second quarter based on orders received and those currently being worked on,” said Dean Milcos, Orbcomm’s chief financial officer. “There’s uncertainty surrounding product sales in the second quarter, as some original equipment manufacturers have temporarily suspended production lines. And due to reduced onsite support, some fleets have delayed deployments.”

For the second quarter of 2020, Orbcomm officials anticipate recurring service revenue to be down as much as 3% over the prior year period as a result of the completion of an AT&T contract, as well as anticipating a small impact from fluctuations in foreign exchange rates.  

“We believe total revenues in the second quarter to be $55 million on the low end and $60 million on the high end, depending on how market conditions evolve. We anticipate adjusted EBITDA margin in the second quarter to be approximately 19%,” Milcos said.