Iridium Communications Inc · NASDAQ:IRDM
Iridium Communications — Investor Day (March 2019)
136 slides from Iridium Communications's investor day presentation, Mar 7, 2019
Slide 1: Welcome!
Exhibit 99.1 Welcome!Exhibit 99.1 Welcome!
Slide 2: Forward-Looking Statements Safe Harbor Statement
Forward-Looking Statements 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 Exch
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company provides Operational EBITDA and Operational EBITDA margin, which are non-GAAP financial measures, as supplemental measures to help investo
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial MeasuresNon-GAAP Financial Measures
Slide 5: Agenda
AGENDA Welcome | Ken Levy Corporate Strategy Overview | Matt Desch Iridium Operations | Suzi McBride Commercial Business | Bryan Hartin U.S. Government Business | Scott Scheimreif Q&A Satelles | Michael O’Connor Aireon | Don Thoma Financial & Operational Overview | Tom Fitzpatrick Q&AAGENDA Welcome
Slide 6: Matt Desch, Chief Executive Officer
Matt Desch Chief Executive OfficerMatt Desch Chief Executive Officer
Slide 7: Welcome! A lot has transpired since our last Investor Day in 2015
Welcome! A lot has transpired since our last Investor Day in 2015… 7Welcome! A lot has transpired since our last Investor Day in 2015… 7
Slide 8: The Iridium Leadership Team
The Iridium Leadership Team Bringing Experience & Continuity Thomas J. Fitzpatrick Matthew J. Desch Suzi McBride Chief Financial Officer & Chief Executive Officer Chief Operations Officer Chief Administrative Officer Don Thoma Chief Executive Officer Aireon Thomas D. Hickey Bryan J. Hartin Scott T.
Slide 9: Executive Summary
Executive Summary Powerful New Network Ready to Exploit $ Our 3B, multi-year project is complete! Growth Vectors Even Stronger IoT, Broadband, Government, Hosted Payloads, and more… Financial Transformation Has Begun! Valuation Considerations Levered Free Cash Flow (LFCF) AND growth company, not jus
Slide 10: We Have Always Been a Growth Story
We Have Always Been a Growth Story… Operational EBITDA $ 325 $ 250 $ 175 $ 100 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % ® 9 CAGR during construction of the upgraded Iridium constellation! 10We Have Always Been a Growth Story… Operational EBITDA $ 325 $ 250 $ 175 $ 100 2009 2010 2011 2012
Slide 11: Our Growth Model is Proven
Our Growth Model is Proven Our Investment How We Operate Proven Growth Model + = New, High Wholesale Go-to- Growing Performing Network Market Approach Subscriber Base (Global, LEO, Cross-linked) (Largely Fixed-Cost Structure) Focus on Attractive, Growing Recurring Service Growing Markets Partner Bas
Slide 12: Subscriber Growth is Accelerating
...And Subscriber Growth is Accelerating! 1,200,000 1.12 Million Billable 1,000,000 Devices & Growing! 800,000 600,000 400,000 200,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12...And Subscriber Growth is Accelerating! 1,200,000 1.12 Million Billab
Slide 13: Iridium Revenue Profile
Iridium Revenue Profile Engineering Services Equipment Service Revenues % 78 of our revenue is recurring – predictable and highly profitable 13Iridium Revenue Profile Engineering Services Equipment Service Revenues % 78 of our revenue is recurring – predictable and highly profitable 13
Slide 14: Upgraded Iridium Constellation Creates Opportunities
Upgraded Iridium Constellation Creates Opportunities NEW EXPANDED Specialty Broadband IoT Services • Maritime / GMDSS • Satellite Time & Location SM • Aviation / GADSS • Iridium Certus Narrowband • Land Mobile / On-the-Move • Government / Secure Voice / PTT Potential Hosted Payloads U.S. Government
Slide 15: Iridium Certus: A Flexible Platform for Growth
Iridium Certus: A Flexible Platform for Growth Iridium Certus % $ 8 25M Introducing Broadband 3-Year CAGR 2018 Service 2019 176 Kbps – 1.4 Mbps (2015-2018) Revenue ® Iridium OpenPort 134 Kbps % $ Voice & Data 2 168M 3-Year CAGR 2018 Service (2015-2018) Revenue Iridium Certus Introducing Narrowband 2
Slide 16: Iridium Certus: A Flexible Platform for Growth
Iridium Certus: A Flexible Platform for Growth $ Ramping ~ 700M Iridium Certus % $ $ 8 25M to 100M / market today Introducing Broadband 3-Year CAGR 2018 Service Year Exiting with growing 2019 176 Kbps – 1.4 Mbps (2015-2018) Revenue 2021 competition ® Iridium OpenPort 134 Kbps % $ Voice & Data 2 168M
Slide 17: The Story of Iridium
The Story of Iridium How to think about IridiumThe Story of Iridium How to think about Iridium
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Slide 21: How to Value Iridium?
How to Value Iridium? Risky, but coming financial transformation LFCF + Growth! Iridium Capital Expense TODAY $ 500M $ 400M $ 300M $ 3B $ 200M Iridium NEXT 10 Year Investment CapEx Holiday $ 100M $ 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Post-Iridium NEXT 21How to Value Ir
Slide 22: 2027 Projected Satellite IoT Market
2027 Projected Satellite IoT Market (Retail Value) Versus $1.5B Today Market is strong and continues to grow Source: NSR % Over 90 of opportunity is within L-Band marketplace 222027 Projected Satellite IoT Market (Retail Value) Versus $1.5B Today Market is strong and continues to grow Source: NSR %
Slide 23: Coverage Plateau Fueling Satellite Growth
Coverage “Plateau” Fueling Satellite Growth Source: Gigaom Source: NSR Broad base of applications fueling growth and this should continue to diversify 23Coverage “Plateau” Fueling Satellite Growth Source: Gigaom Source: NSR Broad base of applications fueling growth and this should continue to divers
Slide 24: Key Growth Markets for Iridium
Key Growth Markets for Iridium Near-Term Expanding Opportunities Emerging Opportunities • Maritime Broadband / VSAT Companion • UAVs • Maritime Connected Leisure Craft/Yachts • Connected Ships • Maritime Safety / GMDSS • Connected Trucks / Vehicles • Aviation Cockpit Voice/Data Applications • IoT (L
Slide 25: The Next Years Will Be Equally Exciting!
The Next 20 Years Will Be Equally Exciting! 25The Next 20 Years Will Be Equally Exciting! 25
Slide 26: Investor Day 2019
INVESTOR DAY2019 :: iridiuny
Slide 27: Suzi McBride, Chief Operations Officer
Suzi McBride Chief Operations OfficerSuzi McBride Chief Operations Officer
Slide 28: A Diverse & Wide-Ranging Organization
A Diverse & Wide-Ranging Organization 28A Diverse & Wide-Ranging Organization 28
Slide 29: World-Class Iridium Network and Operations
® World-Class Iridium Network and Operations IMPROVED NEW SERVICE SERVICE & OUR 2019 FOCUS IRIDIUM CAPABILITIES QUALITY ARE AT IS GROWTH! NETWORK & PRODUCTS ALL-TIME HIGH 29® World-Class Iridium Network and Operations IMPROVED NEW SERVICE SERVICE & OUR 2019 FOCUS IRIDIUM CAPABILITIES QUALITY ARE AT
Slide 30: How Our Network Works
How Our Network Works Iridium Satellites Iridium Satellites Public & Private Networks Hosted Payload Services USG Commercial Gateway Gateway SM Iridium Iridium Certus Satellite Time USG Services Services & Location Services 30How Our Network Works Iridium Satellites Iridium Satellites Public & Priva
Slide 31: The Only Truly Global Network
The Only Truly Global Network Plot of Iridium Service Usage (Origination Points): February 7, 2019 – February 13, 2019 ® SBD Data Transmission Iridium Voice Call ® Iridium OpenPort Data Traffic Iridium Certus Session 31The Only Truly Global Network Plot of Iridium Service Usage (Origination Points):
Slide 32: New Network Brings Powerful New Capabilities
New Network Brings Powerful New Capabilities First-Generation Constellation Upgraded Network Capabilities 2.4 Kbps (SQ) 2.4 Kbps (SQ) Telephony 4.8 Kbps (HQ) ® ® Short Burst Data (SBD ) Narrowband/ Circuit Data 2.4 Kbps < 22 < 88 Kbps Messaging Data 2.4 Kbps Up/Down < 134 Kbps IP data < 176 Kbps IP
Slide 33: New Satellites Offer Improved Performance
New Satellites Offer Improved Performance First-Generation Satellites New Satellites 5-7 Years Design Life 12.5 Years 1100 Connections 1900+ Multiple User Waveforms - 1990s Fixed Technology & Waveforms Computers Reprogrammable Payload Processor Up to 6 Mbps Crosslinks Up to 17 Mbps Up to 3 Mbps Feed
Slide 34: The Iridium Constellation is Healthy and Resilient
The Iridium Constellation is Healthy and Resilient The Iridium constellation upgrade was completed in February, and the network is functioning above expectations! Long constellation life ahead • 66 active satellites • 9 in-orbit spare satellites – can be activated in days if needed • 6 on-ground spa
Slide 35: Excellent Customer Experience and Network Quality
Excellent Customer Experience and Network Quality 100% • Iridium is focused on providing an exceptional user experience • Infrastructure upgrades 99% • Increased capacity • Greater redundancy • Improved real-time 98% monitoring and response January January January January 2016 2017 2018 2019 • Ongoi
Slide 36: Our World Class Operations Team
Our World Class Operations Team Operating the largest and one of the most complicated satellite communications networks requires experience, dedication & automation UNPRECEDENTED HISTORIC 100% of new Iridium Flawless slot-swap satellites captured process without on first attempt customer knowledge a
Slide 37: The Iridium Network is Secure!
The Iridium Network is Secure! • Latest security technology guards against intrusion and denial-of-service attacks • Feeder-links protected from rogue uplinks • Gateway infrastructure investments help manage incoming traffic • Ongoing external security audits • Encryption of critical commands using
Slide 38: Thought Leader in Space Sustainability
Thought Leader in Space Sustainability All first-generation satellites will be de-boosted in 2019 - and most will have re-entered by year-end 38Thought Leader in Space Sustainability All first-generation satellites will be de-boosted in 2019 - and most will have re-entered by year-end 38
Slide 39: Continuous Improvement in Product Quality & Partner Experience
Continuous Improvement in Product Quality & Partner Experience Return Rate (PPM) Inventory Turns 200 3 0 0 2015 2016 2017 2018 2015 2016 2017 2018 Product returns are decreasing Inventory turns are increasing 39Continuous Improvement in Product Quality & Partner Experience Return Rate (PPM) Inventor
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Slide 42: Exploiting Our New Network
Exploiting Our New Network New Products Three Core Components of Research & Development Iridium Certus Services Network & Operational Improvements 42Exploiting Our New Network New Products Three Core Components of Research & Development Iridium Certus Services Network & Operational Improvements 42
Slide 43: Research and Development Vision to Enable Growth
Research and Development Vision to Enable Growth Customer Flexibility Continued Product Evolution Partner / VAM Applications Smaller Form Factor Transceivers High-Speed Transceivers Chipsets Ongoing Network Optimization & Simplification 43Research and Development Vision to Enable Growth Customer Fle
Slide 44: Our Unique Technical Market Niche
Our Unique Technical Market Niche Planned LEO Fixed Satellite Service (FSS) Constellations Operators Highly Mobile High Data Speeds Truly Global Traffic Landing Flexibility Low Latency Proven Technology Available Today 44Our Unique Technical Market Niche Planned LEO Fixed Satellite Service (FSS) Con
Slide 45: Our Unique Technical Market Niche
Our Unique Technical Market Niche Planned LEO Fixed Satellite Service (FSS) Constellations Operators Highly Mobile High Data Speeds Truly Global Traffic Landing Flexibility Low Latency Low Bandwidth/ Proven Technology Highly Mobile/ High Bandwidth/ Available Today High Availability Low Latency/ Fixe
Slide 46: 2019 Focus Areas
2019 Focus Areas New Products & Services • Iridium Certus platform evolution • New narrowband transceivers (Iridium Certus 9770) • Global Maritime Distress and Safety System (GMDSS) Continued Quality Improvement • New U.S. manufacturing site • Improved customer support • Faster gateway recoveries •
Slide 47: Investor Day 2019
INVESTOR DAY2019 :: iridiuny
Slide 48: Bryan Hartin, EVP Sales & Marketing
Bryan Hartin Executive Vice President, Sales & MarketingBryan Hartin Executive Vice President, Sales & Marketing
Slide 49: Iridium's business has transformed over the past 6 years
2013 2019 Iridium’s business has transformed over the past 6 years… 492013 2019 Iridium’s business has transformed over the past 6 years… 49
Slide 50: Key Fundamentals for Growth
Key Fundamentals for Growth Introduce finished Maintain wholesale Enable partner product ® Iridium products approach growth with modules as required and transceivers Iridium has a strong business model and product portfolio as a basis for future growth 50Key Fundamentals for Growth Introduce finishe
Slide 51: What We Sell
What We Sell PRODUCTS SERVICES CIRCUIT SWITCH HANDSETS VOICE & DATA ® IRIDIUM VOICE & DATA PUSH-TO-TALK TRANSCEIVERS ® SBD IoT / SHORT ® TRANSCEIVERS BURST DATA CUSTOM IoT CHIPSETS SOLUTIONS BROADBAND ® IRIDIUM PILOT SERVICES 51What We Sell PRODUCTS SERVICES CIRCUIT SWITCH HANDSETS VOICE & DATA ® IR
Slide 52: Here and Now: Iridium is a Growth Company
Here and Now: Iridium is a Growth Company Key drivers of success are based on our position in each of our target growth markets All markets have growth opportunities in Maritime IoT 2019 and beyond! Existing customer base Innovative partner plus new products and solutions continue to drive services
Slide 53: Hitting the Growth Gear
Hitting the Growth Gear • Upgraded Network • World-Class Technology and Distribution Partners • Attractive Market Opportunities • Regulatory Drivers (GMDSS, AMSRS, GADSS) • Iridium Certus Products and Services • World-Class Marketing with Global Reach • Surgical Direct to Stimulate Demand / “Feet on
Slide 54: Tim Last, VP & GM, Iridium IoT Business
Tim Last | VP & GM, Iridium IoT Business 54Tim Last | VP & GM, Iridium IoT Business 54
Slide 55: Fastest Grower: IoT Market Analysis
Fastest Grower: IoT Market Analysis Current Customer Base • Garmin and Caterpillar • Other key growth accounts • Addressable verticals Product Strategy • Modules and transceivers • Unique partner offerings • Finished products • Roadmap New Iridium Transceivers • What does this mean for our IoT growt
Slide 56: IoT Strategy
IoT Strategy 56IoT Strategy 56
Slide 57: Top IoT Priorities
Top 3 IoT Priorities 57Top 3 IoT Priorities 57
Slide 58: Garmin, Caterpillar
GARMI N. CATERPILLAR
Slide 59: Partnership
Partnership 59Partnership 59
Slide 60: Wholesale Business Strategy
Wholesale Business StrategyWholesale Business Strategy
Slide 61: Wholesale Business Strategy
Wholesale Business Strategy Partners represent: • Face to the customer • Solution and service experts • Market and geography experts Iridium delivers: • Reliable network, products, services • Wholesale distribution program • Resources to stimulate demand Iridium does NOT compete with its partners 61
Slide 62: Partner Growth: Expertise & Value
Partner Growth: Expertise & Value Growth Targets: 400+ • Global heavy equipment OEMs • Railways • UAVs • Foreign MODs • Airframes • Cloud partners • Autonomous ships 2012 2019 Iridium partners provide the “secret sauce” for our growth 62 Selling PartnersPartner Growth: Expertise & Value Growth Targe
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Slide 64: Slide 64
Slide 65: Iridium Certus
SM Iridium Certus • Enterprise-grade L-band services across maritime, land mobile, aviation, and IoT • Fully launched constellation supports Iridium Certus • Multi-service platform • High Quality Voice • Highest L-Band Data throughput • SBD, Streaming, and PTT • Safety Services Launched in January 2
Slide 66: Iridium Certus Service Strategy
BROADBAND Iridium Certus Service Strategy 1408 Iridium Certus 1400 kbps 22 Iridium Certus 20 High Definition Video kbps Video Conferencing Global Maritime Distress and Safety System Multi-User Internet/ VPN (GMDSS)* Telemedicine ACARS Asset Tracking eLog Book 704 Iridium Certus 700 Telemetry kbps St
Slide 67: Iridium Certus Initial Product Strategy
Iridium Certus Initial Product Strategy High Quality Robust ✓ ✓ VesseLINK SAILOR 4300 Powerful World Class ✓✓ MissionLINK Recognized Affordable ✓✓ Brand Safety Easy Install FlytLINK ✓✓ Supported Lighter ✓ ✓ Iridium VAMs have developed superior product offerings based on Iridium’s new, advanced satel
Slide 68: Maritime is our Biggest Growth Opportunity
Maritime is our Biggest Growth Opportunity $ • Maritime is the key focus and majority of 100M target • Superior speed compared to Inmarsat FleetBroadband • Iridium GMDSS recognition will accelerate adoption* • Inmarsat fatigue and pricing abuse • Iridium Certus provides real choice $ Iridium Certus
Slide 69: Maritime Growth Opportunity and Landscape
Ma Maritim ritime Growth e Growth Oppo Opportun rtunity ity and Landscape 2018 Estimated Installs $ • Addressable market in 2021 = 620M* Iridium ® Pilot VSAT $ • Iridium broadband target = 100M annualized run rate as we exit 2021 Fleet Broadband TODAY 2021 2021 Projected Installs % % 4 14 Maritime B
Slide 70: Target Maritime Markets for Iridium Certus 700
Target Maritime Markets for Iridium Certus 700 Merchant Shipping Connected Ship Oil & Gas Industrial Fisheries Leisure Cruise & Ferries 70Target Maritime Markets for Iridium Certus 700 Merchant Shipping Connected Ship Oil & Gas Industrial Fisheries Leisure Cruise & Ferries 70
Slide 71: How We Win in Maritime
How We Win in Maritime INMARSAT NEW CONVERSIONS OPPORTUNITIES GROWTH! The upgraded Iridium network + World-Class value-added manufacturers = Capture of Inmarsat base and new sales opportunities 71How We Win in Maritime INMARSAT NEW CONVERSIONS OPPORTUNITIES GROWTH! The upgraded Iridium network + Wor
Slide 72: Iridium Certus for Primary L-Band Communications
Iridium Certus for Primary L-Band Communications Iridium Certus is ideal for high-speed requirements on vessels, delivering: • Optimal benefits of L-Band and Low-Earth Orbit in a high speed solution • Standardized packaging and speeds • Clear and upfront pricing, no small print Iridium Certus is a s
Slide 73: Iridium Certus for VSAT Companion Use
Iridium Certus for VSAT Companion Use When paired with traditional VSAT, Iridium Certus delivers an ideal hybrid solution combining the benefits of: • Low-Earth Orbit with Geostationary Orbit • L-Band with Ku-Band Iridium Certus maritime solutions expected to be the de facto standard for VSAT compan
Slide 74: Iridium Certus Maritime Go-to-Market Model
Iridium Certus Maritime Go-to-Market Model VAMs SPs Wholesale Service Retail Service Iridium provides both the enabling equipment and the network connectivity for VAMs to sell products and SPs to deliver services to customers 74 SERVICES PRODUCTSIridium Certus Maritime Go-to-Market Model VAMs SPs Wh
Slide 75: Smaller, Faster, Lighter, Less Expensive
ü Smaller ü Faster ü Lighter ü Less Expensive FleetBroadband 500 SAILOR 4300 75ü Smaller ü Faster ü Lighter ü Less Expensive FleetBroadband 500 SAILOR 4300 75
Slide 76: Competitor Terminal Installations
Competitor Terminal Installations Terminal Installation 76Competitor Terminal Installations Terminal Installation 76
Slide 77: Iridium Certus is Easy to Install
Iridium Certus is Easy to Install = Simple Upgrade 77Iridium Certus is Easy to Install = Simple Upgrade 77
Slide 78: Cobham FBB Replacement Capability
Cobham FBB Replacement Capability • Re-use antenna cable • Re-use power supply • Re-use IP handset • New conversion kit for FBB mounting bracket 78Cobham FBB Replacement Capability • Re-use antenna cable • Re-use power supply • Re-use IP handset • New conversion kit for FBB mounting bracket 78
Slide 79: Why Iridium: Global Polar Coverage is Critical
Why Iridium: Global Polar Coverage is Critical “Because of the high latitude of the route, the boats could not use regular communication measures such as satellite phones or long-wave radio. They can only rely on Iridium.” -- Global Times Article, February 2018 Han Guomin, CEO of Cosco Shipping Spec
Slide 80: Why Iridium: Competitive Edge
Why Iridium: Competitive Edge “We like the [Iridium] Certus product. It’s a great addition, and I think they are going to do well with it. There’s no doubt it is a big advancement over the [Iridium] OpenPort service. They have all new satellites and new hardware. In addition to the coverage and tech
Slide 81: Other Key Partner Quotes
Other Key Partner Quotes “Our long-term, non-exclusive “Iridium Certus will alliances and commercial greatly complement our “Iridium's signature full global collaborations with Satellite Speedcast Atlas™ managed coverage, coupled with the Operators ensure we can services portfolio delivering enhance
Slide 82: The Road to Initial $100M in Broadband Revenue
$ The Road to Initial 100M in Broadband Revenue ü Lower initial hardware cost ü Less expensive service plans ü Better customer value ü New and reliable network with higher speeds than competitors ü Lower total cost of ownership ü Enhanced margin for service providers Our superior offering positions
Slide 83: Iridium Certus Growth Opportunity Beyond 2021
Iridium Certus Growth Opportunity Beyond 2021 Iridium Certus Broadband Iridium Certus Narrowband P E RF O RM ANCE 83 P RI CEIridium Certus Growth Opportunity Beyond 2021 Iridium Certus Broadband Iridium Certus Narrowband P E RF O RM ANCE 83 P RI CE
Slide 84: Iridium Narrowband vs. Broadband
Iridium Narrowband vs. Broadband Narrowband (2.4 Kbps) Iridium Certus Narrowband Iridium Certus (22 Kbps - 88 Kbps) Broadband (176 Kbps – 1408 Kbps) 84Iridium Narrowband vs. Broadband Narrowband (2.4 Kbps) Iridium Certus Narrowband Iridium Certus (22 Kbps - 88 Kbps) Broadband (176 Kbps – 1408 Kbps)
Slide 85: Iridium Certus 9770 is in the Sweet Spot for Growth
Iridium Certus 9770 is in the Sweet Spot for Growth • Initial product fills a service gap in 22/88 • Enables partners to innovate • Decreases time to revenue 85Iridium Certus 9770 is in the Sweet Spot for Growth • Initial product fills a service gap in 22/88 • Enables partners to innovate • Decrease
Slide 86: Iridium Certus Growth Opportunities
Iridium Certus Growth OpportunitiesIridium Certus Growth Opportunities
Slide 87: Connected Hotspots for Smartphones and Tablets
Connected Hotspots for Smartphones and Tablets Integration of Iridium Certus 9770 into a second-generation Iridium GO! expands the market by improving user experience st nd 1 Generation 2 Generation App Experience App Experience Custom-Developed Apps Standard Apps Applications Circuit-Switched Data
Slide 88: Monitoring and Safety for Maritime
Monitoring and Safety for Maritime The Connected Ship GMDSS Vessel Monitoring System (VMS) 88Monitoring and Safety for Maritime The Connected Ship GMDSS Vessel Monitoring System (VMS) 88
Slide 89: UAVs and Connected Cars
UAVs and Connected Cars Supports increased data requirements 89UAVs and Connected Cars Supports increased data requirements 89
Slide 90: Scientific Research and Exploration
Scientific Research and Exploration Supports increased data requirements 90Scientific Research and Exploration Supports increased data requirements 90
Slide 91: Pipeline Monitoring
Pipeline Monitoring Supports increased data requirements 91Pipeline Monitoring Supports increased data requirements 91
Slide 92: Iridium Certus Provides the Tools to Conquer and Grow
Iridium Certus Provides the Tools to Conquer and Grow 2019 2013 • New, faster network • Superior equipment from world-class VAMs • Strong partner network • Truly global coverage • Focus on market verticals • Simplified branding and messaging Power Tools Hand Tools The strong market position of Iridi
Slide 93: Iridium = Growth!
Iridium = GROWTH! $ Iridium Certus = 100M broadband revenue exit rate in 2021 Iridium Certus narrowband fueling more growth beyond 2021 We’ve got this! 93Iridium = GROWTH! $ Iridium Certus = 100M broadband revenue exit rate in 2021 Iridium Certus narrowband fueling more growth beyond 2021 We’ve got
Slide 94: Investor Day 2019
INVESTOR DAY2019 :: iridiuny
Slide 95: Scott Scheimreif, EVP U.S. Government Programs
Scott Scheimreif Executive Vice President, U.S. Government ProgramsScott Scheimreif Executive Vice President, U.S. Government Programs
Slide 96: Iridium and the U.S. Government
Iridium and the U.S. Government (USG) • Successful 20-year partnership with the USG • Leverages our unique network • A platform for innovation • An expanding government partner ecosystem • Continued growth and adoption Delivering mission-critical capabilities to the USG for 20 years! 96Iridium and t
Slide 97: Our History with the U.S. Government
Our History with the U.S. Government • Significant investment in government private network in 1990s $ • Our first sole-source award was in December 2000 for 36M • Launched new services through USG investments ® • 2002: Short Burst Data • 2009: Distributed Tactical Communication System (DTCS) ® • 20
Slide 98: Historical Growth Under Enhanced Mobile Satellite Services
Historical Growth Under Enhanced Mobile Satellite Services 113K EMSS Subscriber Growth (2000 – 2018) Iridium Burst DTCS 43K ® SBD 3K 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Variable Rate Contract Fixed Priced Contract Steady growth and a proven
Slide 99: Key Differentiator: Our Network
Key Differentiator: Our Network • Crosslinked LEO constellation • Dedicated USG gateway • Truly global coverage • Highly mobile applications • Independence from foreign infrastructure • Operational security Our truly global, Low-Earth Orbit (LEO) network provides critical operational benefits 99Key
Slide 100: Innovations & Investments
Innovations & Investments • Dismounted tactical communications • NSA accredited secure communications • Gateway enhancements • Emerging products and services • Improved situational awareness Our network provides a unique platform for innovation, enabling mission success 100Innovations & Investments
Slide 101: Market Expansion: Iridium USG Partners
Market Expansion • Iridium USG partners 101Market Expansion • Iridium USG partners 101
Slide 102: Market Expansion: Experimentation and Trials
Market Expansion • Experimentation and trials 102Market Expansion • Experimentation and trials 102
Slide 103: Market Expansion: Commercial SATCOM Transition
Market Expansion • Commercial SATCOM transition 103Market Expansion • Commercial SATCOM transition 103
Slide 104: Market Expansion: Future of Space in the USG
Market Expansion • Future of space in the USG We are well positioned to continue the success well into the future 104Market Expansion • Future of space in the USG We are well positioned to continue the success well into the future 104
Slide 105: Rate of Growth is Increasing
Rate of Growth is Increasing 113K EMSS Subscriber Growth (2013 – 2018) 51K 2013 2014 2015 2016 2017 2018 ® The growth surge over the past five years illustrates the USG’s reliance on Iridium 105Rate of Growth is Increasing 113K EMSS Subscriber Growth (2013 – 2018) 51K 2013 2014 2015 2016 2017 2018 ®
Slide 106: Reasons for Growth and Adoption
Reasons for Growth and Adoption • Unique acquisition vehicle • Successful public / private partnership We have created an environment for continued growth 106Reasons for Growth and Adoption • Unique acquisition vehicle • Successful public / private partnership We have created an environment for cont
Slide 107: Reasons for Growth and Adoption
Reasons for Growth and Adoption • Amazing new network • Attractive competitive environment We have created an environment for continued growth 107Reasons for Growth and Adoption • Amazing new network • Attractive competitive environment We have created an environment for continued growth 107
Slide 108: Reasons for Growth and Adoption
Reasons for Growth and Adoption • Expanded industrial partner base We have created an environment for continued growth 108Reasons for Growth and Adoption • Expanded industrial partner base We have created an environment for continued growth 108
Slide 109: Supporting the USG Over the Years
Supporting the USG Over the Years • Mobile, secure communications • Humanitarian assistance and disaster response • Resilient and reliable connectivity • Polar communications • Real-time situational awareness • Command and control Increased adoption is driven by our long-term relationship with USG 1
Slide 110: Enabling Growth through Iridium Certus
SM Enabling Growth through Iridium Certus Secure Truly global Communications-on-the-move (COTM) Proven industry partners Iridium Certus is taking off in the USG market 110SM Enabling Growth through Iridium Certus Secure Truly global Communications-on-the-move (COTM) Proven industry partners Iridium
Slide 111: Enabling Growth through Satellite Time & Location
Enabling Growth through Satellite Time & Location (STL) • Alternative Position, Navigation and Timing (PNT) • Resilient and diverse • Addresses a critical capability gap We continue to identify new applications that leverage our unique network 111Enabling Growth through Satellite Time & Location (ST
Slide 112: Looking to the Next 20 Years
Looking to the Next 20 Years • In negotiations for our next service contract • Builds on success of last five years • Provides a vehicle for future innovation • Integration of Iridium across major programs • Excited and motivated partner base Expecting a win-win outcome for our future services contr
Slide 113: The Future of Iridium in the USG has Never Been Brighter
The Future of Iridium in the USG has Never Been Brighter! • The USG remains our single largest customer • EMSS contract negotiations continue • We fully anticipate that our 20-year partnership with the USG will continue well into the future • Our USG partners remain motivated to integrate Iridium in
Slide 114: Investor Day 2019
INVESTOR DAY2019 :: iridiuny
Slide 115: Tom Fitzpatrick, Chief Financial Officer
Tom Fitzpatrick Chief Financial OfficerTom Fitzpatrick Chief Financial Officer
Slide 116: Iridium Prospects
Iridium ProspectsIridium Prospects
Slide 117: Iridium 2018 Revenue
Iridium 2018 Revenue 2018 Total Revenue $ 523M Equipment & Engineering • Total Service Revenue is recurring $116M and highly predictable (22%) • Driver of future OEBITDA growth Total Service Revenue $407M (78%) 117Iridium 2018 Revenue 2018 Total Revenue $ 523M Equipment & Engineering • Total Service
Slide 118: Diversified Business Lines Provide Multiple Growth Drivers
Diversified Business Lines Provide Multiple Growth Drivers Reporting Segment Recurring Revenue 2018(A) $ Commercial Telephony 168M Commercial Voice & Data $ Commercial Broadband 25M $ Commercial IoT 85M Commercial IoT Data $ Hosted Payload 26M Hosted Payload & Other Data Services $ Other Data Servic
Slide 119: Telephony: Historical Performance & Future Prospects
Telephony: Historical Performance & Future Prospects Service Revenue Subscribers ($ Millions) (in 000s) $ $ $ $ $ 165.9 158.5 156.0 155.0 167.9 347 344 344 351 352 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ARPU (Annual Revenue Per User) • Expect modest subscriber growth and stable ARPU throu
Slide 120: Iridium Certus Broadband Progression
Iridium Certus Broadband Progression Exit Rate: Monthly Service Revenues U.S. Government $ ~ 8.2 Million Aviation Land Mobile Maritime More than double subscriber base at materially higher ARPU $ 2.2 Million $ 6 – 7M revenue $ ~9,500 ships at ~ 230 from Maritime monthly ARPU Post-2021 Dec-18 Dec-21
Slide 121: Commercial IoT: Historical Performance & Future Prospects
Commercial IoT: Historical Performance & Future Prospects IoT Subscribers Service Revenue (in 000s) ($ Millions) 647 $ % 85.1 Personal Communications 15 510 % $ 13 74.1 413 $ 65.5 $ 359 61.3 $ 325 193 58.4 121 78 52 30 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ARPU (Annual Revenue Per User)
Slide 122: Hosted Payload: Historical Performance & Future Prospects
Hosted Payload: Historical Performance & Future Prospects $ 47M $ 35-40M $ 26M $ Average approx. 47M per year in Hosting Revenues at full ramp $ 2M 2017 2018 2019 2020 Future • Expect Aireon to pay material dividends no later than 2024 • Eventually Aireon Annual Dividends are projected to exceed hos
Slide 123: Satellite Time & Location: Historical Performance & Future Prospects
Satellite Time & Location: Historical Performance & Future Prospects Service Revenue ($ Millions) $ 4.5M Non-Recurring Catch-Up $ 9.6 $ 5.1 $ 3.7 $ 0.7 2019 2016 2017 2018 (E) $ % • 5.1M annually in the near term covers approximately 2.5 of globe wherever required • Expanded geography and use cases
Slide 124: Diversified Business Lines Provide Multiple Growth Drivers
Diversified Business Lines Provide Multiple Growth Drivers Y/Y Recurring Revenue 2018(A) 2019(E) Revenue Characteristics Change ® Highly defensible base + PTT & Iridium GO! growth – expect low single digit $ % Commercial Telephony 168M + 8 growth (plus Iridium Certus 9770 22/88 opens new capabilitie
Slide 125: Handset Shipments and Equipment Revenue
Handset Shipments (in 000s) 52 Equipment Revenue 42 39 37 2015 2016 2017 2018 ($ Millions) $ 97.8 2019 $ $ expected to 78.2 77.1 $ $ 74.2 73.6 be down from 2018 with low growth thereafter 2014 2015 2016 2017 2018 2019 • Handsets: Expect reduced shipments in 2019, then relatively flat thereafter • Io
Slide 126: 2019 Financial Guidance
2019 Financial Guidance Metrics 2019 $ Total Service Revenue ~ 440M $ $ Operational EBITDA (OEBITDA) 325M – 335M Cash Taxes Negligible through approximately 2023 (1) Net Leverage ~4.5x (1) At year end, expect ~4.75x Net leverage if refinancing completed (due to transaction costs) 1262019 Financial G
Slide 127: OEBITDA Margins Historical Performance & Future Prospects
OEBITDA Margins Historical Performance & Future Prospects % % 59 59 % % 58 57 % % % 54 53 53 % Projected margin 50 % 46 expansion on a primarily fixed-cost base 2010 2011 2012 2013 2014 2015 2016 2017 2018 Future • Significant operating leverage • OEBITDA margins increase over time 127OEBITDA Margin
Slide 128: Iridium Capital Structure Evolution
Iridium Capital Structure EvolutionIridium Capital Structure Evolution
Slide 129: Iridium Capital Structure Road Map
Iridium Capital Structure Road Map Retire Refinance % 10.25 BPI Maintain target debt ratios at 2.5x – 3.5x OEBITDA and use excess cash for (1) HY Debt Facility dividends, share buybacks, and strategic investments if compelling w/ tack-on As early as Spring 2019 Spring 2020 2019 2020 2021 2022 2023 2
Slide 130: Comparative Terms
Comparative Terms Intention is to refinance BPIAE facility as early as spring 2019 (pending market conditions) with a pre-determined accordion in place to refinance the HY bond in spring 2020 (post non-call period) $ • Potential Term Loan B: approximately 1.5B for 7-year term $ • Revolver: approxima
Slide 131: Estimated Cash Taxes
Estimated Cash Taxes % ~24 % Negligible Cash Taxes through 2023 ~0 2019 – 2023 2024 – 2025 2026 2027 2028+ Assumes all OEBITDA changes affect GAAP operating income and Taxable income similarly Tax estimates above are based on 2018 tax laws and professional tax guidance 131 Blended Statutory Tax Rate
Slide 132: Investment Highlights
Investment Highlights Maximizing Superior Operating Strong Cash Flow Flexible Allocation Shareholder Returns Performance Conversion of Capital $ • Continued Path to ~ 2B in • OEBITDA CAGR • 10+ year deleveraging capital returns >9% since 2009 CapEx holiday through 2025 • Return capital • Monetizing
Slide 133: Levered Free Cash Flow
Levered Free Cash Flow 2019 Normalized & Future Growth ($ Millions, Except per Share) 2019 Outlook $ OEBITDA (2019 Guidance Midpoint) 330 $ Iridium CapEx (Non-Iridium NEXT) ( 35) $ $ $ Working Capital (expected 5M to 10M annual range) ( 8) (1) $ Interest ( 120) $ Cash Taxes 0 $ LFCF 167 (2) $ LFCF/S
Slide 134: More Comparable to Fiber & Tower Sectors than Satellite Peers
More Comparable to Fiber & Tower Sectors than Satellite Peers 8.0x 21.4x 10.8x EBITDA Multiples 12.7x Satellite Services Fiber Iridium Tower REITs Factors Affecting Valuation in Each Sector ü Traditionally high CapEx requirements creating barriers to entry ü Recurring revenueü Long-term contractual
Slide 135: Iridium's Attractive Financial Profile
Iridium’s Attractive Financial Profile Other Satellite Services Fiber Tower REITs (a) % % % % 2018/2019 EBITDA Growth (-3 ) 6 9 3 % >57 % % % (b) 2018 EBITDA Margins 62 44 64 (and expanding) % <7 (c) % % % CapEx Intensity 28 19 18 (and contracting) (d) (e) % % % % LFCF Yield 6 4 6 5 % LFCF Conversio
Slide 136: Investor Day 2019
INVESTOR DAY2019 “iridium