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Orbcomm reports third-quarter loss of $5.5M

Earnings per share and revenue do beat Wall Street expectations

Orbcomm beat Wall Street expectations in earnings per share and revenue, which officials attributed to the “company’s integration efforts.” (Photo: Jim Allen/FreightWaves)

Orbcomm Inc. (NASDAQ: ORBC) on Wednesday reported a third-quarter net loss of $5.5 million, with a per-share loss of $0.07.

The Rochelle Park, New Jersey-based company posted revenue of $61.7 million in the period, compared to $69.1 million during the third-quarter of 2019, a 10.7% decrease.

Company officials said the decline in revenue can partly be attributed to “certain customers in the oil and gas and heavy equipment markets that limited usage of our services in response to the ongoing COVID-19 pandemic.”

The telematics and asset monitoring/tracking provider however beat Wall Street expectations in earnings per share and revenue, which officials attributed to the “company’s integration efforts.” 

Wall Street analysts had predicted a loss of $0.09 per share and revenue of $60.2 million. 

“We’ve taken large leaps getting through our integration efforts and have a number of new products currently being released to the market,” said Marc Eisenberg, president and chief executive officer of Orbcomm, during the company’s earnings call on Wednesday. “We’ve been generating a good deal of cash and – have purchased 30 million of our high-yield notes.”

Eisenberg added that the company has extended “contracts with Carrier North America Truck Trailer group and in addition we’ve won some meaningful new deals.”

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

Service revenues were $39.7 million in the third quarter, compared to $40.5 million during the same period last year, a 1.9% decrease. 

Product sales were $22 million in the third quarter, compared to $28.6 million in the third quarter in 2019, a 23% decrease.

Orbcomm’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter was $14.3 million, compared to $16.9 million during the same period in 2019.

The year-over-year decline was primarily due to the flow-through impact from lower revenue, mainly product sales, partially offset by reduced operating expenses, officials said. Orbcomm’s adjusted EBITDA margin was 23.2% in the third quarter of 2020, slightly down versus the prior year period.

Orbcomm had operating cash flow of $18.7 million during the third quarter, an increase of  $9 million more compared to the third quarter in 2019. 

“The transportation market appears to be recovering. Deployments in our transportation group took a positive step in the third quarter, as we’re seeing a mix of growing demand for many of our large, long-standing customers as well as a number of new projects,” Eisenberg said.

Orbcomm recently sold new refrigerated and driving solution products to several carriers, such as TVM Carriers and Demond Truck Lines, Eisenberg said.

“A great example of our development work supporting the upcoming Canadian ELD mandate is with Reimer Express Lines, a large Canadian truckload carrier, which will begin deploying our incap solution in the fourth quarter on their fleet of 1,500 trucks,” Eisenberg said.

2020 guidance

Orbcomm officials expect fourth-quarter total revenue to be between $60 million and $64 million and anticipate adjusted EBITDA margin to be between 22.5% and 23.5%. The company intends to provide first-quarter 2021 guidance during the earnings conference call in February.

Orbcomm third-quarter financial highlights.

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]