[08-28-12] While the second quarter is usually one of the weaker periods of the fiscal year for most satellite companies, the 2012 second quarter cultivated more than a few surprising results in a wide variety of markets. The satellite industry continues to battle macro-economical challenges: the slow pace of recovery from the recession; tightening budgets for governments and household consumers; and unfavorable exchange rates between unsteady world economic powers. Despite these issues, satellite turned in a stronger than expected performance in the second quarter. Satellite News<\/i> highlights five of the most noteworthy reports from the sector.<\/p>\n
\nSiriusXM Breaks Quarterly Subscriber Addition Record<\/b>
\nSatellite broadcaster SiriusXM<\/b> Radio<\/b> grew its revenues by 13 percent in the second quarter of 2012 to $838 million on top of a jump in subscribers that prompted its management to boost the company\u2019s annual profit forecast.
\n SiriusXM CEO Mel Karmazin said that despite mixed macroeconomic trends, the company added more than 600,000 subscribers in the second quarter, representing a record for the broadcaster during the time after its merger with XM.
\n \u201cWe also attained a record-level free cash flow of $230 million \u2014 the highest single quarterly free cash flow figure in SiriusXM\u2019s history,\u201d Karmazin said in a statement. \u201cWe are excited to deliver our new SiriusXM on-demand service to our subscribers via the Internet and smartphones, and our program to launch a personalized music feature via these same channels by the end of the year is on track. We are very pleased with the strong operating results we have delivered since the merger, especially our performance in 2012.\u201d
\n SiriusXM\u2019s adjusted EBITDA for the second quarter was $237 million \u2014 a 28 percent increase from the $185 million it reported in the second quarter of 2011.
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\nCom Dev Profits More Than Quadruple from Last Year<\/b>
\nCom Dev International\u2019s<\/b> profits surged amid higher margins in its 2012 second fiscal-quarter. The company\u2019s net earnings climbed to $5.2 million on $50.1 million in revenue generated in the three-month period ending April 30, compared with a profit of $1.3 million on $53.1 million in sales recorded in the previous year.
\n The company\u2019s space equipment division posted sales of $47.5 million, which was down from $51 million a year earlier, but the unit\u2019s margins rose to 24 percent from 22 percent in the 2011 second-quarter. Com Dev data services revenue rose from $2 million in 2011 to $2.5 million in 2012, while gross margins jumped from 8 percent to 12 percent during the same period of time.
\n Com Dev\u2019s gross margins widened to 25 percent from 21 percent, thanks to stronger results in the core equipment business and progress in the data services unit, the company said in the report.
\n <\/b>
\nDigitalGlobe\u2019s Surprising Post-Merger Revenue Spike<\/b>
\nEarth imagery provider DigitalGlobe<\/b> reported a surprising 23 percent increase in its 2012 second-quarter revenues to $102 million, beating analysts\u2019 consensus of $93 million and marking the company\u2019s third consecutive quarter of double-digit growth. Just weeks after DigitalGlobe announced its merger with former rival GeoEye, the company showed a vast improvement in its EBITDA margins to 47.1 percent and deliverable EBITDA at $48 million, compared to market forecasts of $40 million.
\n DigitalGlobe management credited strong growth in its government business for the strong performance. Raymond James<\/b> Analyst Chris Quilty highlighted the fact that, despite macro budget headwinds created by the merger, DigitalGlobe\u2019s Defense & Intelligence segment grew 27 percent year-over-year, which were aided by an approximate $11 million bump in SLA payments and a surprising $5.5 million increase in value-added services (VAS).
\n \u201cWhile the SLA bump should be sustainable, management is less sanguine regarding future VAS funding levels,\u201d Quilty said in an Aug. 1 research note. \u201cWe reiterate our \u2018strong buy\u2019 rating and $25 price target for DigitalGlobe after the company easily beat the consensus second quarter 2012 forecast and raised its full-year outlook in the face of material merger and acquisition costs that were above the line. While not reflected in our model, we believe the proposed acquisition of GeoEye will significantly boost DigitalGlobe\u2019s growth and profitability, while decreasing the company\u2019s risk profile, including government market exposure.\u201d
\n DigitalGlobe\u2019s commercial revenues also increased 10 percent compared with the same period in 2011, with sales to international civil customers in markets such as Russia and China increasing 67 percent. Quilty noted that an increasing percentage of DigitalGlobe\u2019s customers are committing to long-term contracts as opposed to one-time orders, as recurring revenues now account for approximately 85 percent of the company\u2019s annual sales.
\n \u201cWe are raising our 2012 EBITDA forecast for DigitalGlobe by 2 percent to $182 million, while maintaining our 2013 estimate of $213 million,\u201d said Quilty. \u201cOur $25 price target assumes that DigitalGlobe can trade at a multiple of 6.5 over our 2013 EBITDA estimate of $213 million, which is within the stock\u2019s three-year historical range. Our 2013 EBITDA forecast does not reflect the impact of the proposed GeoEye acquisition, which could include an additional $13 per share in value to DigitalGlobe.\u201d
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\nNumerex Yields 116,000 Net Subscriptions<\/b>
\nOn-demand and interactive machine-to-machine (M2M) technology and solutions provider Numerex<\/b> added a company record 116,000 net subscriptions in its 2012 fiscal second quarter, which more than doubled its 42,000 net additions in the same period last year, according to the company\u2019s latest financial results issued July 31.
\n Numerex\u2019s second quarter performance brings its total subscriber net gains in the first half of 2012 to 199,000, which also is more than double the 95,000 net subscriptions it recorded by this time in 2011. Additionally, the company\u2019s subscription-based recurring revenue growth reached 16 percent in the first half of the year and 5.4 percent in sequential growth from the first quarter of this year, representing an annualized rate of 21.6 percent.
\n Numerex\u2019s consolidated gross margin for the second quarter increased slightly to 44.3 percent from 43.8 percent in the second quarter of 2011. Numerex Chairman and CEO Stratton Nicolaides said his company\u2019s strong performance in the second quarter was the result of an across-the-board increase in demand for its interactive and on-demand services and solutions.
\n \u201cWe have added several new customers this year who have introduced new innovative M2M solutions during the first half of the year, contributing significantly to our subscription base,\u201d Nicolaides said in a statement. \u201cIn addition, our existing customer base continues to add subscriptions at a robust pace. Our on-demand subscription-based model is highly scalable and is expected to drive improved financial results over the balance of the year as we continue to deliver on-demand and interactive device management, network, and application services from our fully integrated and hosted M2M platform.\u201d
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\nOrbcomm Builds on AIS Momentum <\/b>
\nGlobal satellite data communications provider Orbcomm<\/b> has reported its second consecutive quarter of Automatic Identification System (AIS) revenue growth after a year of struggles to get the shipboard broadcast system moving in the maritime market. Orbcomm\u2019s adjusted EBITDA of $4.2 million beat analysts\u2019 estimates of $4 million, backed by a 38 percent year-over-year increase in service revenues to $12.4 million \u2014 a new record for the company. Orbcomm management said the growth was aided by a higher subscription count and a 13 percent increase in ARPUs compared with the same period in 2011.
\n The company\u2019s overall second quarter revenues increased 51 percent from the corresponding period last year to $16.3 million due to strong organic growth and Orbcomm\u2019s recent acquisition of PAR LMS, though barely fell short of the $16.4 million market consensus.
\n Orbcomm CEO Marc Eisenberg said that the company\u2019s ARPUs should flatten in the next several quarters pending the mid-2013 launch of its first batch of OG2 satellites.
\n \u201cOur AIS solution was selected to be the sole provider by the European Maritime Safety Agency (EMSA), which awarded us a multi-year contract to provide satellite-based AIS data used for ship tracking and maritime navigation safety efforts,\u201d Eisenberg said in a statement. \u201cThis is a major endorsement by EMSA to be the sole provider of AIS because our product provides the best service and value on the market. We also added two heavy equipment customers in recent months.\u201d
\n Sierra Nevada Corp. recently completed environmental testing for Orbcomm\u2019s second-generation prototype spacecraft. The spacecraft will be launched in October on SpaceX\u2019s next Falcon-9 launch vehicle along with first Cargo Re-supply Services mission to the International Space Station.<\/p>\n","protected":false},"excerpt":{"rendered":"
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