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Why Is Iridium (IRDM) Down 10.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Iridium Communications (IRDM - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Iridium due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Iridium Records Narrower Q4 Loss, Offers Bullish View
Iridium reported relatively healthy fourth-quarter 2020 results, with GAAP net loss narrowing year over year on higher revenues. Despite COVID-19 adversities, the company recorded double-digit subscriber growth in 2020 driven by a resilient business model and strength of its safety services and mobility platform.
Net Loss
On a GAAP basis, net loss in the December quarter was $7.9 million or loss of 6 cents per share compared with net loss of $107.9 million or loss of 82 cents per share in the prior-year quarter. The year-over-year improvement was mainly driven by higher revenues in the reported quarter and high debt extinguishment charges in the year-earlier quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 8 cents. In full-year 2020, the company reported net loss of $56.1 million or loss of 42 cents per share compared with net loss of $162 million or loss of $1.33 per share in 2019.
Revenues
Quarterly revenues totaled $146.5 million compared with $138.9 million in the year-ago quarter. The 5.5% growth was mainly driven by strength in subscriber equipment sales and higher engineering and support service revenues. The top line surpassed the consensus mark of $139 million. In full-year 2020, total revenues improved to $583.4 million from $560.4 million in 2019.
Total service revenues inched up 2.9% to $116.9 million from $113.6 million in the year-ago quarter. This was primarily driven by growing subscriber base in the commercial and government service business. Markedly, service revenues contributed 79.8% to total revenues in the fourth quarter. Subscriber equipment revenues improved 10.5% to $18.9 million from $17.1 million in the year-ago quarter due to robust demand in the reported quarter. Continued favorable trends related to the U.S. dollar exchange rate were also a vital factor. Engineering and support service revenues soared 28.9% to $10.7 million, mainly due to the episodic nature of contracted work with the U.S. government.
Other Details
Total operating expenses were $141.4 million compared with $138.9 million in the prior-year quarter. Operational EBITDA (OEBITDA) increased 5.9% to $84.8 million or 57.9% of revenues. The company ended the quarter with 1,476,000 billable subscribers compared with 1,300,000 in the year-ago quarter. The year-over-year increase was backed by growth in commercial IoT customers, driven by rising activations of personal communications devices.
Cash Flow & Liquidity
In 2020, Iridium generated $249.8 million of net cash from operations compared with $198.1 million a year ago. Capital expenditures in 2020 were $38.7 million compared with $117.8 million in 2019. As of Dec 31, 2020 the company had $237.2 million in cash and equivalents with $1,596.9 million of net long-term secured debt compared with respective tallies of $223.6 million and $1,412.5 million in the year-ago period. Management authorized a new share buyback program that would enable the company to repurchase $300 million worth of shares by the end of 2022.
Guidance
Despite the macroeconomic headwinds caused by COVID-19 pandemic, Iridium has emerged as a strong player on the back of its resilient business model. The company has offered a bullish outlook for 2021 and expects service revenues to grow 3% year over year. Iridium expects full-year 2021 OEBITDA to be between $365 million and $375 million, up from $355.6 million in 2020. Net leverage is anticipated to be nearly 3.5x OEBITDA by the end of 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 11.11% due to these changes.
VGM Scores
At this time, Iridium has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Iridium (IRDM) Down 10.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Iridium Communications (IRDM - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Iridium due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Iridium Records Narrower Q4 Loss, Offers Bullish View
Iridium reported relatively healthy fourth-quarter 2020 results, with GAAP net loss narrowing year over year on higher revenues. Despite COVID-19 adversities, the company recorded double-digit subscriber growth in 2020 driven by a resilient business model and strength of its safety services and mobility platform.
Net Loss
On a GAAP basis, net loss in the December quarter was $7.9 million or loss of 6 cents per share compared with net loss of $107.9 million or loss of 82 cents per share in the prior-year quarter. The year-over-year improvement was mainly driven by higher revenues in the reported quarter and high debt extinguishment charges in the year-earlier quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 8 cents. In full-year 2020, the company reported net loss of $56.1 million or loss of 42 cents per share compared with net loss of $162 million or loss of $1.33 per share in 2019.
Revenues
Quarterly revenues totaled $146.5 million compared with $138.9 million in the year-ago quarter. The 5.5% growth was mainly driven by strength in subscriber equipment sales and higher engineering and support service revenues. The top line surpassed the consensus mark of $139 million. In full-year 2020, total revenues improved to $583.4 million from $560.4 million in 2019.
Total service revenues inched up 2.9% to $116.9 million from $113.6 million in the year-ago quarter. This was primarily driven by growing subscriber base in the commercial and government service business. Markedly, service revenues contributed 79.8% to total revenues in the fourth quarter. Subscriber equipment revenues improved 10.5% to $18.9 million from $17.1 million in the year-ago quarter due to robust demand in the reported quarter. Continued favorable trends related to the U.S. dollar exchange rate were also a vital factor. Engineering and support service revenues soared 28.9% to $10.7 million, mainly due to the episodic nature of contracted work with the U.S. government.
Other Details
Total operating expenses were $141.4 million compared with $138.9 million in the prior-year quarter. Operational EBITDA (OEBITDA) increased 5.9% to $84.8 million or 57.9% of revenues. The company ended the quarter with 1,476,000 billable subscribers compared with 1,300,000 in the year-ago quarter. The year-over-year increase was backed by growth in commercial IoT customers, driven by rising activations of personal communications devices.
Cash Flow & Liquidity
In 2020, Iridium generated $249.8 million of net cash from operations compared with $198.1 million a year ago. Capital expenditures in 2020 were $38.7 million compared with $117.8 million in 2019. As of Dec 31, 2020 the company had $237.2 million in cash and equivalents with $1,596.9 million of net long-term secured debt compared with respective tallies of $223.6 million and $1,412.5 million in the year-ago period. Management authorized a new share buyback program that would enable the company to repurchase $300 million worth of shares by the end of 2022.
Guidance
Despite the macroeconomic headwinds caused by COVID-19 pandemic, Iridium has emerged as a strong player on the back of its resilient business model. The company has offered a bullish outlook for 2021 and expects service revenues to grow 3% year over year. Iridium expects full-year 2021 OEBITDA to be between $365 million and $375 million, up from $355.6 million in 2020. Net leverage is anticipated to be nearly 3.5x OEBITDA by the end of 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 11.11% due to these changes.
VGM Scores
At this time, Iridium has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.