Iridium(IRDM) - 2025 Q2 - Quarterly Report

Part I. Financial Information Financial Statements Presents Iridium Communications Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2025, covering balance sheets, operations, cash flows, and notes Condensed Consolidated Balance Sheets Total assets decreased to $2.57 billion by June 30, 2025, from $2.67 billion at year-end 2024, primarily due to reduced cash Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Total Assets | $2,568,111 | $2,671,471 | | Cash and cash equivalents | $79,309 | $93,526 | | Total Liabilities | $2,094,496 | $2,094,834 | | Long-term secured debt, net | $1,809,169 | $1,757,767 | | Total Stockholders' Equity | $473,615 | $576,637 | Condensed Consolidated Statements of Operations and Comprehensive Income Q2 2025 total revenue increased to $216.9 million, but net income decreased to $22.0 million due to a non-recurring prior-year gain Q2 2025 vs Q2 2024 Performance (Three Months Ended June 30) | Metric | Q2 2025 (In thousands) | Q2 2024 (In thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $216,906 | $201,067 | +7.9% | | Operating Income | $50,258 | $43,646 | +15.1% | | Net Income | $21,968 | $32,336 | -32.1% | | Diluted EPS | $0.20 | $0.27 | -25.9% | H1 2025 vs H1 2024 Performance (Six Months Ended June 30) | Metric | H1 2025 (In thousands) | H1 2024 (In thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $431,784 | $404,920 | +6.6% | | Operating Income | $110,646 | $93,417 | +18.4% | | Net Income | $52,380 | $51,989 | +0.7% | | Diluted EPS | $0.48 | $0.42 | +14.3% | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow increased to $190.7 million, while cash used in investing decreased and financing activities increased, driven by repurchases and dividends Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (In thousands) | 2024 (In thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $190,696 | $152,540 | | Net cash used in investing activities | $(45,256) | $(137,719) | | Net cash used in financing activities | $(162,608) | $(22,845) | | Net decrease in cash | $(14,217) | $(8,329) | Notes to Condensed Consolidated Financial Statements The notes provide detailed information on accounting policies, financial instruments, debt, equity, revenue, and related party transactions - The company's Term Loan balance was $1.77 billion as of June 30, 2025, bearing interest at SOFR plus 2.25% with a 0.75% SOFR floor and maturing in September 2030[39][41][43] - The company repurchased 4.9 million shares for $135.0 million in the first six months of 2025, with $295.3 million remaining available for repurchase under the current program[58][60] - Total services revenue for H1 2025 was $309.9 million, with commercial services contributing $256.4 million and government services contributing $53.5 million[61] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial performance, including revenue, operating expenses, net income, liquidity, capital resources, debt, and cash flow Overview of Our Business Iridium operates a 66-satellite LEO constellation for global mobile communications, expanded into PNT services, and grew billable subscribers to 2.48 million by June 2025 - Iridium is the only commercial provider of communications services with true global coverage via its 66-satellite L-band constellation[88][89] - The company acquired Satelles, Inc. in Q2 2024 to enter the secure position, navigation, and timing (PNT) services market, which is expected to generate substantial growth[90] - Billable subscribers grew by 3% year-over-year to approximately 2,483,000 as of June 30, 2025[92] Results of Operations Q2 2025 total revenue grew 8% to $216.9 million, driven by Engineering and Support services, while net income decreased 32% due to a non-recurring gain Q2 2025 vs Q2 2024 Revenue Breakdown | Revenue Stream | Q2 2025 ($M) | Q2 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Services | 155.6 | 152.5 | +2% | | Subscriber equipment | 19.5 | 22.8 | -15% | | Engineering and support | 41.9 | 25.8 | +62% | | Total Revenue | 216.9 | 201.1 | +8% | - The significant increase in Engineering and Support revenue and associated costs was primarily due to increased work under government contracts, predominantly the contract with the Space Development Agency (SDA)[97][99] - The decrease in Q2 2025 net income was primarily caused by a $19.8 million gain on the equity method investment in Satelles recorded in Q2 2024 upon its acquisition, which did not recur[108][109] Liquidity and Capital Resources Liquidity sources include cash from operations, $79.3 million cash on hand, and a $100 million Revolving Facility, with H1 2025 cash used for repurchases and dividends - Cash and cash equivalents decreased to $79.3 million from $93.5 million at year-end 2024, primarily due to share repurchases and dividends[127] - The company has a Term Loan with a balance of $1.77 billion maturing in 2030 and a Revolving Facility with $50 million outstanding maturing in 2028[128][131][137] - A $28.5 million excess cash flow prepayment in Q2 2025 has suspended required quarterly principal payments until the fourth quarter of 2026[135] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on its $1.77 billion Term Loan and $50 million Revolving Facility, partially mitigated by an interest rate cap - The company has an outstanding Term Loan of $1.77 billion and a Revolving Facility of $50.0 million, both subject to variable interest rates based on SOFR[146][147] - An interest rate cap is in place to manage exposure on a notional amount of $1.0 billion of the Term Loan, providing a hedge if one-month SOFR exceeds 1.436%[146] Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[151] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[152] Part II. Other Information Legal Proceedings The company reports no material pending legal proceedings beyond routine litigation incidental to its business - There are no material pending legal proceedings against the company[155] Risk Factors No material changes have occurred in the risk factors since the Annual Report on Form 10-K for December 31, 2024 - No material changes have occurred in the risk factors since the last Annual Report[157] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 2,553,517 shares at $25.45 per share, with $295.3 million remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1-30 | 1,228,806 | $24.40 | | May 1-31 | 587,689 | $25.51 | | June 1-30 | 737,022 | $27.13 | | Total | 2,553,517 | $25.45 | - The maximum value of shares that may yet be purchased under the plan is $295.3 million as of June 30, 2025[158] Other Information Timothy P. Kapalka, Chief Accounting Officer, adopted a Rule 10b5-1 trading plan for the potential sale of up to 5,833 shares - Timothy P. Kapalka, Chief Accounting Officer, adopted a Rule 10b5-1 trading plan for the sale of up to 5,833 shares[161][162] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL data files[166]