Iridium Communications Inc · NASDAQ:IRDM
Iridium Communications — RBC 2010 Technology, Media & Communications Conference
36 slides from Iridium Communications's conference presentation, Jun 10, 2010
Slide 1: Iridium Communications Inc. - RBC 2010 Technology, Media & Communications Conference
Exhibit 99.1 Iridium Communications Inc. RBC 2010 Technology, Media & Communications Conference Matt Desch, CEO June 10, 2010
Slide 2: Disclaimer - Safe Harbor Statement
2 Disclaimer Safe Harbor Statement This presentation contains statements about future events and expectations known as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities ExchangeAct of 193
Slide 3: Basis of Presentation
3 Basis of Presentation • Reporting Entity For comparison purposes, we have presented the operating results of Iridium Holdings LLC and Iridium Communications Inc. on a combined basis for the year ended December 31, 2009 along with the Iridium Holdings LLC operating results for 2008. The combined 20
Slide 4: Our Company
4 Our Company • Satellite voice and data solutions for enterprise & government • The only provider offering 100% worldwide coverage • #2 industry player by revenue • 66 satellite Low Earth Orbit (LEO) constellation plus in-orbit spares for service through Iridium NEXT • ~359,000 billable subscribers
Slide 5: What Investors Need to Know
5 What Investors Need to Know • We have unique service capabilities –unlikely to be replicated – in a market projected to double by 2016(1) • Our subscribers, service revenue and Operational EBITDA are all growing rapidly (and did so through the recession) • We are a very attractive business with Op
Slide 6: Unique Position in the MSS Market - Service Capabilities Not Easily Duplicated
6 Unique Position in the MSS Market - Service Capabilities Not Easily Duplicated
Slide 7: Mobile Satellite Services (MSS) Market
7 Mobile Satellite Services (MSS) Market 2006-2009 MSS Relative 2009 • MSS market generated ~ $1.2B in Provider Size(1)(3) Revenue Revenue 2009 revenue(1) CAGR • MSS Industry CAGR of 12% expected Inmarsat $695 MM(4) 12% 2010 –2015(2) • Iridium & Inmarsat are the two largest providers Iridium $319 MM
Slide 8: Iridium Markets & Illustrative Applications
8 Iridium Markets & Illustrative Applications
Slide 9: U.S. Government - The Anchor Customer
9 U.S. Government –The Anchor Customer • The U.S. government relies on Iridium for global communications • Significant DoD investment in proprietary 2004 gateway & equipment DoDRevenue(2) • DoD has been our anchor customer since 2001 • Serves all DoDbranches (Army, Navy, Air Force, Marines, Special
Slide 10: Iridium Is Used - Everywhere
10 Iridium Is Used –Everywhere M2M (SBD) Data Transmission Voice Call OpenPort Session One week plot of SBD Session, Voice Call, & OpenPort Session Origination Points week of 5/23/10-5/29/10 (Commercial Traffic Only)
Slide 11: Expanding Distribution Network
11 Expanding Distribution Network • Wholesale distribution model minimizes costs and risks • Growing web of hundreds of total distribution partners • Partners provide “outsourced R&D” to develop specialty products for individual customer segments • >200 individual applications targeting key vertical
Slide 12: New Core Products
12 New Core Products Accelerating our Growth Iridium Aero OpenPort Pre-NEXT Devices Iridium OpenPort Iridium High 9505A U.S. DOD Functionality Tactical Radio Handset Original Iridium (Netted) Motorola Voice 9555 Voice & Data Low Cost Handset Modem Handset M2M Iridium M2M 9601 9522B 9602 iGPS M2M Chi
Slide 13: Licensing in New Markets
13 Licensing in New Markets New Geographic Opportunities • Today we have distribution presence in over 100 countries • Potential distribution presence in certain countries offering large growth opportunity: • Russia,China, India, South Africa –Population of 2.7B (1) • Currently pursuing entering the
Slide 14: Growing Rapidly, Even Through Recession
14 Growing Rapidly, Even Through Recession
Slide 15: Continued Growth Expected
15 Continued Growth Expected 2010 2009 1Q’10 Guidance Subscribers(1) 342K 359K 376K –393K Up 11.2% Up 14.3% Up 10 –15% ~375K already as of 6/10/10! Commercial $160.2 M $40.9 M Up 10 –12% Service Revenue Up 20.3% Up 11.0% Government $53.7 M $13.7 M Up 3 –5% Service Revenue(2) Up 2.4% Up 3.1% Equipmen
Slide 16: Subscriber and Service Revenue Key to Earnings Growth
16 Subscriberand Service Revenue Key to Earnings Growth (000's) (1) Robust Billable Subscriber Growth • Growing billable subscriber base drives recurring service revenue • Enterprise and government end-users • Service revenue is predictable and growing Q1 03 Q1 10 ($M's) Service Revenue $235 $201 $1
Slide 17: Substantial Operating Leverage
17 Substantial Operating Leverage • Largely fixed cost business model • ExpandingOperational EBITDAmargin (1) Operational EBITDA Operational EBITDA Margin 1Q10Margin 41%- up 340bpsfrom previous 1Q (1) Operational EBITDA is defined on slide 3. Operational EBITDA margin is defined as Operational EBITD
Slide 18: Government Backing for Low-Cost, Flexible Financing
18 Government Backing for Low-Cost, Flexible Financing
Slide 19: Iridium Has a Strong Balance Sheet
19 Iridium Has a Strong Balance Sheet • Net Cashof $146Mat end of 1Q10(1) • Strong cash producing operations - 2010 Operational EBITDA guidance provided of $145 –155M • $262M of potential warrant proceeds from $7.00 and $11.50 warrants (1) Includes Cash & Restricted Cash, less indebtedness at March
Slide 20: June 2 Announcement
20 nd June 2 Announcement • Iridium announced a comprehensive plan for Iridium NEXT constellation and financing • Iridium signed an agreement with Thales Alenia Space(TAS) for next- generation constellation after a comprehensive competitive process • $2.1B(1) contract for 81 satellites (66 operation
Slide 21: Iridium NEXT Financing
21 Iridium NEXT Financing • Coface, France’s export credit agency, has issued a ‘Promise of Guarantee’ which commits to cover 95% of $1.8B facility • Iridium expects an attractive fixed rate consistent with other ECA financings (1) and a flexible, long term (15 years) • Facility only drawn down thro
Slide 22: Iridium NEXT Prime Selection
22 Iridium NEXT Prime Selection • TAS offers the best comprehensive solution for Iridium in terms of design, functionality, price, schedule and financing • Initial launch scheduled during Q1 2015 • Current fleet expected to provide service through transition to Iridium NEXT • Fully compatible with c
Slide 23: Hosted Payload Opportunity
23 Hosted Payload Opportunity • Significant interest from government and industry in sharing Iridium NEXT global networked communications infrastructure • New cash flow stream potential for Iridium • Pre-launch (2012 – 2014) and after launch (data delivery 2015 and beyond) • Potential customers appr
Slide 24: Putting Cost of Iridium NEXT in Perspective
24 Putting Cost of Iridium NEXT in Perspective • $2.9B constellation (current estimated total cost) (1) • Assumes constellation provides commercially acceptable service through 2030(2) • Large cash flow potential over constellation life justifies the investment: 1) Computed at a Euro to USD exchange
Slide 25: Valued at Large Discount to Peers
25 Valued at Large Discount to Peers
Slide 26: Iridium Trading at 3.3x 2010E Operational EBITDA
26 Iridium Trading at 3.3x 2010E Operational EBITDA Current Iridium Trading Valuation ($ in millions, except per-share data) Share Price as of 6/4/2010 $8.74 x Shares Outstanding (1) 73.0 Market Capitalization $638 Less: Net Cash(2) ($146) Enterprise Value $492 (3) Divided by: 2010E Operational EBIT
Slide 27: Iridium NEXT Financing and Equity Value
27 Iridium NEXT Financing and Equity Value Expected Iridium NEXT Cumulative CapexSpend • $1.8B Coface-backed facility will be drawn down over time in line with capital expenditures… Potential Operational EBITDA Growth(1) • While Operational EBITDA grows(1) Significant Equity Value In All Years As We
Slide 28: The Iridium Success Story
28 The Iridium Success Story • Company today has a record of performance - nearly no net debt and strong and growing Operational EBITDA… • Memories gradually fading from predecessor bankruptcy twelve years ago • Extensive scrutiny through recent corporate and financial transactions validate Iridium’
Slide 29: Summary
29 Summary Numerous Opportunities for Growth in Fast Increasing Revenue Growing Market Strong Base of Customers Positive & Growing EBITDA Leverage on Assets and Expanding Margins Distribution Model Iridium NEXT Constellation Industry Leadership Fully Financed
Slide 30: Appendix
s+ iridium Everywhere Appendix RE LIAB LE*G RITIGAL« LI] FELINES
Slide 31: Q1 2010 Summary Highlights
31 Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Summary Highlights Iridium Holdings LLC Iridium Communications Inc. For the Three Months Ended March 31, For the Three Months Ended March 31, (In thousands) 2009 2010 % Change (1) (1) Revenue Subscribers Revenue Subscribers Revenue Subs
Slide 32: Q1 2010 Consolidated Statements of Operations
32 Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Consolidated Statements of Operations (In thousands) Iridium Holdings LLC Iridium Communications Inc. For the Three Months Ended March 31, Purchase Accounting 2009 2010 Adjustments (1) Revenue: Services: Government $ 18,468 $ 19,013 $ -
Slide 33: Q1 2010 Operational EBITDA Non-GAAP reconciliation
33 Iridium Communications Inc. and Iridium Holdings LLC Q1 2010 Operational EBITDA Non-GAAP reconciliation (In thousands) Iridium Communications Iridium Holdings LLC Inc. Three Months Ended Three Months Ended March 31, 2009 March 31, 2010 Net income (loss) $ 9,718 $ (1,317) Interest expense 4,622 12
Slide 34: 2009 Summary Highlights
34 Iridium Communications Inc. and Iridium Holdings LLC 2009 Summary Highlights Iridium Holdings LLC Iridium Communications Inc. For the Year Ended December 31, For the Year Ended December 31, (In thousands) 2008 2009 % Change Revenue Subscribers(1) Revenue Subscribers (1) Revenue Subscribers Commer
Slide 35: 2009 Consolidated Statements of Operations
35 Iridium Communications Inc. and Iridium Holdings LLC 2009 Consolidated Statements of Operations Iridium Communications (In thousands) Iridium Holdings LLC Inc. Iridium Holdings LLC Combined Year (1) Impact of Purchase For the Three Months For the Period January Accounting For the Year Ended Ended
Slide 36: 2009 Operational EBITDA Non-GAAP reconciliation
36 Iridium Communications Inc. and Iridium Holdings LLC 2009 Operational EBITDA Non-GAAP reconciliation (In thousands) Iridium Iridium Holdings LLC Communications Inc. Iridium Holdings LLC Combined Year(1) For the Period January For the Year Ended Three Months Ended 1, 2009 to September For the Year
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