ORBCOMM, Inc. (NASDAQ:ORBC) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 08:30 am ET

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ORBCOMM, Inc. (NASDAQ:ORBC) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to ORBCOMM's Second Quarter 2020 Results Conference Call. [Operator Instructions] Please note, this event is being recorded, and a replay of this conference will be available from approximately 11 a.m. Eastern Time today through August 13, 2020. The replay service details can be found in today's press release. Additionally, ORBCOMM will have a webcast available in the Investors section of its website at www.orbcomm.com.

I'd like to turn the call over to Mr. Aly Bonilla, ORBCOMM's Vice President of Investor Relations. Please go ahead, Aly.

Executive
Aly Bonilla

Good morning, and thank you for joining us. Today, I'm joined by Marc Eisenberg, ORBCOMM's Chief Executive Officer; and Dean Milcos, ORBCOMM's Chief Financial Officer. On today's call, Marc will provide some highlights on the quarter and give an update on the business. Dean will then review the company's quarterly financial results and outlook. Following our prepared remarks, we will open the line for your questions.

Before we begin, let me remind you that today's conference call includes forward-looking statements and that actual results may differ from the expectations reflected in these statements. We encourage you to review our press release and SEC filings for a full discussion of the risks and uncertainties that pertain to these statements. ORBCOMM assumes no duty to update forward-looking statements. Furthermore, the financial information we will discuss include non-GAAP financial measures. Reconciliation of these non-GAAP measures to GAAP measures is included in our press release.

At this point, I'll turn the call over to Marc Eisenberg. Thanks, Aly, and good morning, everyone. Before we begin, we hope you and your families are staying safe during these unprecedented times. Our thoughts go out to those impacted by the pandemic. Earlier this morning, we issued a press release announcing our financial results for the second quarter ending June 30, 2020. Our results came in slightly better than analyst expectations with revenue add consensus and adjusted EBITDA well ahead, leading to substantial cash generation. Total revenue for the second quarter was $56.7 million, down 15% from prior year, but in line with guidance. We made great strides in Q2, offsetting revenue declines through reductions in costs. As a result, service margin increased 130 basis points to 67.3% and operating expenses were down $1.4 million over the prior period. These contributions led to adjusted EBITDA of $11.9 million or a 21% margin, which was better than expected. Our cash flow and liquidity position remains strong. We generated operating cash flow of $12.6 million in Q2, a pretty amazing increase of $11 million over last year's second quarter and our eighth consecutive quarter of positive operating cash flow. We ended the quarter with over $62 million in cash. This is after the repayment of $15 million on our revolving credit line, and a $10 million semiannual interest payment on our debt. Excluding these items, the company grew cash in Q2 by a record $17 million. And differently, while our cash balance is down $8 million from Q1, our