Better than I expected....
Wednesday July 28, 7:47 am Eastern Time
Company Press Release
SOURCE: Orbital Sciences Corporation
Orbital Reports Second Quarter Financial Results; Total Revenue
Increases 30%, Operating Income up 52%
DULLES, Va., July 28 /PRNewswire/ -- Orbital Sciences Corporation (NYSE: ORB - news) today announced its second quarter 1999 financial
results, reporting total enterprise revenue of $244,700,000 (before eliminating contributions from its unconsolidated ORBCOMM and
ORBIMAGE affiliates), up approximately 30% from second quarter 1998 total revenue of $188,500,000. Earnings before interest, taxes,
depreciation, amortization and equity adjustments (EBITDA) in the second quarter of 1999 were $23,800,000 compared to $18,300,000 in the
second quarter of 1998, a 31% increase. Operating income increased 52% to $12,500,000 in the quarter from $8,300,000 in the same period last
year. Finally, as a result of substantial start-up losses in the company's satellite services businesses, after-tax losses were approximately
$10,100,000 (or $0.27 per share) in the 1999 quarter as compared to after-tax income of $6,000,000 (or $0.17 per share) last year.
On a consolidated basis, revenue was $232,300,000 in the second quarter, an increase of about 26% from last year's second quarter revenue of
$184,500,000. Other consolidated results are summarized below:
Second Second
Quarter Quarter Percent
1999 1998 Change
Revenue $232,286,000 $184,516,000 +26%
Gross Profit 54,832,000 50,851,000 +8%
EBITDA 23,836,000 18,251,000 +31%
Operating Income 12,504,000 8,251,000 +52%
Net Income (Loss) (10,149,000) 5,998,000 N/A
Earnings Per Share (0.27) 0.17 N/A
Firm Backlog 2,080,000,000 1,298,000,000 +60%
Total Backlog 4,304,000,000 3,564,000,000 +21%
Other significant highlights from the second quarter of 1999 were as follows:
Orbital's space and ground infrastructure systems business booked over $250,000,000 in new orders during the quarter, bringing firm
contract backlog to nearly $2.1 billion and total backlog to over $4.3 billion, both new records for the company.
Orbital's satellite access products business continued to improve its financial performance, significantly reducing pre-tax losses to
$1,300,000 in the second quarter from $5,800,000 for the same period last year.
ORBCOMM, Orbital's satellite-based two-way mobile data communications service business, reported total demand of approximately
116,000 subscriber units in service or on order at the end of the second quarter, exceeding internal targets.
ORBIMAGE, Orbital's satellite-based Earth imaging service business, reported total contract backlog of almost $500,000,000
(ORBIMAGE's backlog is not included in Orbital's reported backlog figures above).
ORBNAV, Orbital's new satellite-based automotive information service business, began operating its joint venture with The Hertz
Corporation in the quarter after receiving initial shipments of Magellan's second-generation car navigation product.
The company also reported total enterprise revenue for the first six months of 1999 of $462,600,000, compared to total revenue for the first half
of 1998 of $377,500,000, reflecting a 23% overall increase. Consolidated revenue increased almost 18% during that same period, from
$370,700,000 in 1998 to $436,600,000 this year. EBITDA for the first six months of 1999 was $38,900,000 compared to 1998's first-half EBITDA of
$40,600,000. Finally, after-tax losses were $26,000,000 (or $0.70 per share) for the six months ended June 30, 1999 as compared to after-tax income
of $10,700,000 (or $0.31 per share) for the same period last year.
Details of Orbital's financial results for the second quarter and first half of 1999 are provided below for each of the company's three business
sectors:
Space and Ground Infrastructure Systems
Orbital's space and ground infrastructure systems sector, including satellites and other space systems, launch vehicles, electronics and
sensors, and ground systems and software, reported revenue of $195,400,000 in the second quarter, an increase of approximately 25% from last
year's second quarter revenue of $155,700,000. Infrastructure systems produced operating income of $17,400,000 in the quarter compared to
operating income of $16,600,000 this time last year. EBITDA in the second quarter of 1999 was approximately $26,000,000 compared to
$25,600,000 in the same quarter of 1998.
Second Second
Quarter Quarter Percent
1999 1998 Change
Revenue $195,356,000 $155,701,000 +25%
EBITDA 26,012,000 25,630,000 +1%
Operating Income 17,373,000 16,630,000 +4%
Net Income 16,621,000 18,487,000 -10%
Infrastructure systems reported revenue of $370,600,000 for the first half of 1999 compared to $312,000,000 for the first half of 1998, an increase
of 19%. Operating income for the first six months of 1999 was $32,500,000 compared to $35,500,000 in the first half of 1998. EBITDA for the first
half of 1999 was $49,900,000 compared to $53,500,000 in the same period of 1998.
During the first half of 1999, Orbital booked new orders for its space and ground infrastructure systems products worth over $600,000,000,
including approximately $350,000,000 in the first quarter and $250,000,000 in the second quarter. These new orders boosted firm and total
contract backlog at June 30, 1999 to approximately $2.1 billion and $4.3 billion, respectively, representing increases of 60% and 21% compared to
backlog figures a year ago.
During the second quarter, Orbital conducted four successful space missions, including another successful launch of its Pegasus rocket,
bringing its record to 31 consecutive successful space and suborbital launches over the last three years. During the quarter, Orbital
successfully deployed two of its satellites and supported the flawless operation of one of its major space payloads. With these recent missions,
Orbital's cumulative operational experience increased to 279 rocket launches, satellite deployments and space payload operations during the
last 17 years, with an overall reliability of 97%. Finally, in May the company completed the previously-announced acquisition of Spar
Aerospace Ltd.'s space robotics business, located near Toronto, Canada.
Satellite Access Products
Orbital's satellite access products sector, consisting of its Magellan subsidiary's satellite navigation, positioning and communications products,
reported revenue of $32,400,000 in the second quarter, an increase of approximately 13% from second quarter 1998 revenue of $28,600,000.
Magellan reported a net loss of approximately $1,300,000 in the second quarter, significantly better than the net loss of $5,800,000 in the second
quarter of 1998. Magellan reached EBITDA breakeven in the second quarter of 1999, contrasted with an EBITDA loss of $6,600,000 in the same
period last year.
Second Second
Quarter Quarter Percent
1999 1998 Change
Revenue $32,411,000 $28,556,000 +13%
EBITDA (28,000) (6,597,000) N/A
Operating Income (Loss) (2,222,000) (7,597,000) N/A
Net Income (Loss) (1,270,000) (5,761,000) N/A
For the first half of 1999, Magellan reported revenue of approximately $58,600,000, slightly better than comparable 1998 revenue of $58,300,000.
Magellan's net loss for the first six months of 1999 totaled $2,800,000 compared to a net loss of $7,500,000 for the same period in 1998. EBITDA
losses for the first half of 1999 were approximately $900,000 compared to losses of $10,500,000 in the same period in 1998.
During the second quarter of 1999, Magellan built and shipped over 115,000 consumer and industrial satellite navigation products while also
making substantial progress in implementing its growth and margin enhancement strategies. For example, Magellan completed development of
its second-generation automotive navigation product and made initial shipments to the ORBNAV/Hertz joint venture. The company expects to
ship about 40,000 more automotive navigation products to the joint venture by the end of 1999. Magellan also completed development of its
first OEM communications product for ORBCOMM applications and received orders for about 25,000 units of this low-cost satellite data
modem. In addition, Magellan's proposed business combination with Lowrance Electronics Inc. (Nasdaq: LEIX - news) received government
regulatory approvals in the last several months, keeping it on track to close in the third quarter
Satellite Services
Orbital's satellite services sector consists of its ORBCOMM and ORBIMAGE affiliates and ORBNAV subsidiary, as well as its interests in other
emerging satellite-based services businesses.
Satellite services revenue totaled $16,900,000 in the second quarter, up over 300% compared to revenue of $4,000,000 in the second quarter of
1998. (Orbital generally does not include the revenue of its ORBCOMM and ORBIMAGE satellite services affiliates in its consolidated revenue.)
Total sector EBITDA losses were $2,100,000 in the quarter, while after-tax losses were approximately $25,500,000. Total sector EBITDA losses
were $800,000 in the second quarter of 1998, while after-tax losses were $6,700,000 this time last year.
Second Second
Quarter Quarter Percent
1999 1998 Change
Revenue $16,893,000 $3,996,000 +323%
EBITDA (2,148,000) (782,000) N/A
Operating Income (Loss) (2,647,000) (782,000) N/A
Net Income (Loss) (25,500,000) (6,728,000) N/A
In the second quarter, ORBCOMM increased its total subscriber units in service or on order by more than 80%, from approximately 63,000 units
in March to over 116,000 units in June. Its installed subscriber base grew by about 70%, with approximately 10% of the total units in service at
the end of the quarter.
ORBCOMM's focus on sales to market leaders in the trucking, railroads, construction equipment and utilities industries is helping to establish
its technology as the accepted standard in wide-area data communications for these businesses. For example, recent evidence of ORBCOMM's
strong market endorsement by trucking industry leaders includes the following second-quarter milestones:
Selection of its trailer tracking service for large-scale fleet deployment by Schneider National Inc. and J.B. Hunt, Inc., the two largest
trucking companies in North America;
A marketing agreement with GE Capital's TIP unit, the world's largest trailer leasing company;
A sales agreement with QUALCOMM Inc., the trucking industry's leading communications service provider; and
OEM relationships with several of the U.S.'s largest trailer and refrigeration equipment manufacturers.
ORBCOMM also made important progress in the second quarter in its international operations, adding over 60 new countries to a group that
now numbers 190 countries covered by international service providers. Commercial service is expected to be available in approximately half of
these countries by the end of 1999.
ORBIMAGE also accomplished several significant milestones in the last three months, including completing one new international distribution
contract in a key market area, that boosted its backlog and increased its total international coverage to over 100 countries. The company also
raised $75 million of additional capital to fully fund its expanded business plan, now involving five imaging satellites and related ground-based
infrastructure.
During the quarter, Orbital's ORBNAV subsidiary and Hertz started installation of Magellan's new 750NAV automotive guidance units in Hertz'
rental car fleet. During the next six months, ORBNAV will equip 50,000 rental cars in 50 cities in the U.S., Canada and Europe with Magellan's
advanced navigation technology, expanding the availability of this popular Hertz service. ORBNAV is also considering additional
satellite-delivered services for private passenger cars and other automotive markets that could be offered using Magellan technology and
ORBCOMM network communications.
Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer, said, ``In the second quarter, Orbital produced solid financial results
in our space and ground infrastructure systems business, reaching almost $200 million in quarterly revenue and achieving about 9% operating
margins. These results are fully consistent with our targets for the year. We also saw additional improvement in Magellan's growth rate and
operating margins, where net losses were reduced substantially from second quarter 1998 results and where we reached EBITDA breakeven in
the quarter.'
Mr. Thompson continued, ``As expected, start-up losses at our satellite services businesses -- primarily our ORBCOMM and ORBIMAGE units
-- remained heavy in the quarter, even though increasing market demand for their data communications and digital imaging services was
encouraging. ORBCOMM completed the second quarter ahead of our internal targets with approximately 116,000 total subscriber units installed
or on order, while ORBIMAGE ended June with a fully-financed business plan and a total contract backlog of nearly $500 million.'
Orbital is a space and information systems company that designs, manufactures, operates and markets a broad range of affordable space
infrastructure systems, satellite access products and satellite services, including satellites and other space systems, launch vehicles, electronics
and sensors, satellite ground systems and software, satellite-based navigation and communications products, and satellite-delivered
communications, Earth imaging and other information services.
Note: ``Safe Harbor' Statement Under the Private Securities Litigation Reform Act of 1995. Certain ``forward-looking statements' contained in
this release involve unknown risks and uncertainties that may cause the actual results, performance or achievements of the company to be
materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements. In
particular, statements containing objectives, goals, targets and expectations are not projections of future performance. In addition, factors such
as general economic and business conditions, product performance, market acceptance of products, services and technologies, consumer
demand, dependence upon long-term contracts with commercial and government customers and timely and accurate assessment of ``Year 2000'
issues may impact the company's revenues, expenses and profit from period to period. These factors and others related to the company's
business are described in further detail in the company's SEC filings, including its Form 10-K and Forms 10-Q.
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