ORBCOMM Inc.
Q1 2008 Earnings Call Transcript

Published: 27 May 2008

[Operator:]

Good morning. My name is Jennifer and I will be your conference operator today. At this time I'd like to welcome everyone to the ORBCOMM first quarter 2008 Earnings Call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Mr. Robert Costantini, CFO. Sir, you may begin your conference.

[Robert Costantini:]

Thank you. Good morning and thank you all for joining us. As we normally do, we'll start with a few housekeeping items. Early this morning we issued a press release announcing financial results for the first quarter of 2008. A replay of this conference call will be available beginning at 12

[Marc Eisenberg:]

Thanks, Robert. Good morning, everyone, and thank you for joining us today on the call. This morning, we reported our financial results for the first quarter. We increased our service revenue and narrowed our net loss significantly, compared to the first quarter of 2007. In addition, we achieved positive adjusted EBIDTA for the second straight quarter. We reported a slight decrease in total revenues compared to the first quarter last year, due to an anticipated decrease in product sales as more modems enter the market from third-party suppliers. We reported an 8% increase in billable subscriber communicators over our bases at December 31, 2007, increasing our base to more than 380,000. Robert will take you through the numbers in more detail shortly. These results demonstrate the progress we are making in executing on our business strategy of increasing high margin service revenues, which continues to be the key driver of profitability, while moderating our costs. Before we expand more on our business strategy, I'd like to give you an update on our satellites. The Coast Guard satellite is complete and ready to be shipped to the launch site. Four of the five Quick Launch satellites have completed all system and environmental tests. The last satellite is expected to be complete in its final testing by the end of the week. Following this, we'll conduct a comprehensive pre-shipment review. If all goes well upon completion of this review, we expect to announce the shipment date of these satellites from Germany to Russia by the end of this month and launch approximately one month thereafter. The Cosmos 3M rocket has been transported from the manufacturing facility to the Kapustin Yar launch site awaiting the arrival of the satellites. While we received an extension from the U.S. Coast Guard to launch the Coast Guard satellite by August 15th, we anticipate launching well before that date. Yesterday we announced an agreement for the manufacturing of 18 of ORBCOMM's second generation or OG2 satellites, which I will get in to in greater detail in just a few moments. A key component to our strategy is the ability to add OEM subscribers to our base of billable subscriber communicators and we are pleased to report that over 60% of the net additions this quarter came from OEM customers. Growth from OEMS is steady and predictable, providing strong service revenue foundation for the company. Growth from aftermarket sales is somewhat choppier and less predictable, but offers significant upside opportunity. These two revenue streams compliment each other well and serve as the basis for our service revenue growth expectations. We are pursuing additional OEM business in three ways. First, by adding new OEMS, second by working with existing OEM customers to increase the number of products for which they standardize ORBCOMM services, and third by adding additional territories in which they can grow. We have had success on all of these fronts. We are continuing to expand into new geographical territories and signing new value-added resellers. ORBCOMM's network of ground infrastructure enables VARS, IVARS, and OEMs to develop a product using a single global standard and received worldwide operation with a single airtime agreement and no roaming charges. ORBCOMM uses 14 operational GES sites, providing near real-time messaging service in North America, South America, Central America, North Africa, Asia, and Europe. In April, we announced further expansion into Latin America following new regulatory approval by the governments of Peru. Our service was previously only authorized in connection with maritime applications and now ORBCOMM's low-earth orbit satellite service is available for the full range of applications. We also expect that the recent series of new regulatory authorizations in Central and South America will help to expand our reseller network with additional Latin American VARS and IVARS. In addition to the gaining regulatory approval in Peru, ORBCOMM will manage the marketing and sales efforts in Argentina and Brazil on an exclusive basis. The new operational structure will allow us to market directly to value-added resellers. The management structure will make it possible for us to significantly expand the number of local partners seeking to develop solutions using our satellite network. This is one more step toward providing one seamless network across the Americas. As you can see, we remain focused on adding to our growing list of more than 80 countries and territories where we're authorized to operate. In April, ORBCOMM acquired a 37% stake in ORBCOMM Japan Ltd., and we intend to increase our stake to 51%. This transaction will give us greater control over the operations in the important Japanese market and surrounding countries while contributing revenue and expected incremental profits. Robert will give you more detail on this transaction later on the call. We are continuing to build our new terrestrial service business, which has started strong with T-Mobile. In the second quarter we are adding AT&T to our mix of product offerings. We are confident that we will be able to capitalize on the exciting applications for the service and introducing dual-mode devices that combine ORBCOMM and terrestrial services. This dual-mode technology is a great fit for applications that require higher bandwidth and global coverage that are traditionally served by higher priced satellite networks. Recently ORBCOMM and Wavecom, one of the world's largest GSM data module providers entered into a joint market agreement to address together the growing demand for dual-mode devices. In addition, Wavecom has announced the Q52 Omni Wireless device providing a combination of cellular, ORBCOMM satellite and GPS technology on a single device, enabling significant cost savings over multiprocessor solutions as well as a less expensive module than most satellite only solutions. We expect opportunities like these to enhance our business and generate growth for the company over the long-term. For a moment, let's get back to satellites. We are excited about the progress we're making in our next generation satellites. As you've seen, we have recently announced a significant milestone for the company. The Federal Communications Commission approved ORBCOMM's next-generation satellite constellation, assigned additional spectrum for ORBCOMM's use, renewed the space station license for an additional 15-year term until the year 2025 and approved ORBCOMM's operation of the AIS or Automatic Identification System, a maritime tracking signal receiver that will be designed into all new ORBCOMM satellites. These developments support our next-generation orbital deployment plan, which will enhance the global coverage provided by the current ORBCOMM satellite constellation, allowing us to implement a variety of enhanced subscriber services and reduce network latency, all important elements of our long-term growth strategy. Shortly following these approvals, we signed a contract with Sierra Nevada Corporation, or SNC, to build 18 new ORBCOMM Generation 2 or OG2 satellites to augment and upgrade ORBCOMM's existing satellite constellation with an option to purchase up to 30 additional OG2 satellites. The OG2 satellites will provide current subscribers a seamless transition between current satellites and OG2 and secure the ORBCOMM space segment to accommodate all customers well into the future. As prime contractor, SNC has formed an experienced integrated space team with unique and established space heritage, resources, and proven track record, including Boeing Intelligence and Security Systems, ITT Space Systems, and MicroSat Systems. Sierra Nevada Corporation is an electronic systems and integration enterprise providing developments, manufacturing, integration, and logistics for complex airborne, space, ground, and sea base systems. SNC has over 1,200 employees with 22 office locations in 18 states across the United States. SNC with its expensive communications expertise has assembled an outstanding OG2 team that created an impressive technical solution to achieve ORBCOMM's long-term strategic objectives by providing approved capacity, faster message delivery, larger messages, and AIS capability. Boeing is one of the world's largest aerospace companies and will be assuming a mission assurance role in which they are responsible for technical oversight and verification of the overall design to insure that they meet the standard aerospace requirements. Boeing will also be responsible for orbit analysis and launch coordination to insure that the satellites will be placed in the proper orbit. ITT has over 50 years of experience and well recognized in communication imaging and sensor development. ITT Space Systems will lead the system engineering management by performing project managements and systems engineering functions to verify that the satellites will be meeting all of its technical requirements. It will also play a role in engineering supports to achieve optimal satellite integration onto the launch vehicle. MicroSat Systems, a wholly owned subsidiary of SNC, will leverage its award winning experience on the TacSat2 mission to design the spacecraft and perform integration and test activities to the OG2 satellites. The integration space team also includes several other key subcontractors and industry leaders with experience in both the design and construction of complex communication systems and spacecraft. SNC has 30 days to select from two ORBCOMM approved payload providers. Each OG2 satellite will be equipped with an enhanced communications payload, designed to increase subscriber capacity by up to 12 times over the current ORBCOMM satellites. ORBCOMM customers will be able to transmit data over the OG2 satellites at greater speeds and send larger data packets using future modems. The OG2 satellites will be backward compatible, so the existing subscriber communicators will function seamlessly with the OG2 satellites. In addition, all OG2 satellites will be designed with the Automatic Identification System payloads to receive and report transmissions from the approximately 68,000 AIS equipped maritime vessels. ORBCOMM anticipates selecting the launch vehicle within 12 months and plans to launch the 18 OG2 satellites in three separate missions of six satellites, each between 2010 and 2011, consistent with the FCC authorization recently announced by ORBCOMM. SNC's unique mechanical configuration allows for multiple satellites to be efficiently packaged into several types of launch vehicles, providing ORBCOMM with flexibility in selecting a launch provider. The total contract value for the 18 spacecraft is $117 million, not including launch and insurance. Payments under the contract begin upon execution and will extend into the second quarter of 2012, subject to SNC's successful completion of each performance milestone. At this point, I'd like to turn the call over to Robert Costantini, our Chief Financial Officer, who will take you through the financial results.

[Robert Costantini:]

Thanks, Marc. I know most of you have already reviewed the results, so I'll summarize the financials for the first quarter of 2008. Then I'd like to make a few points regarding our next-generation satellite contract, particularly how it may affect the outlook on the company's cash position. We continue to improve our profitability metrics and anticipate benefiting from some significant developments in the quarter that we believe will support the growth in the service component of the business. As we have said, service revenues are and will continue to be the primary driver of our growth and profitability. The most important development is the growth in the OEM business, which remains a key component of our business strategy and while we don't typically sell the hardware associated with that growth, we benefit from higher service revenues as our subscriber communicator base continues to grow. Another significant development is the new hardware entering the marketplace, accelerating growth. Although product sales from our subsidiaries fell or declined this quarter as anticipated at the start of the year, the substantial volume increases by other ORBCOMM certified manufacturers enhanced the growth in our billable subscriber communicator base. And as Marc pointed out, there are a number of other developments with new VARS coming into the network as well as our equity interest in ORBCOMM Japan. The improvement in our profitability metrics this quarter were driven by growth in service revenues and our ability to maintain moderate growth in the rise of cost and expenses and in some case reduce the costs and expense category. We also benefited this quarter from a gain on the settlement with ORBCOMM Japan, which helped create positive adjusted EBITDA. This was a nice result since we weren't expecting to see positive adjusted EBITDA until the second half of the year. Total revenues for the quarter ended March 31, 2008, were $5.9 million, a decrease of 1.4% compared to the first quarter of 2007. Service revenues increased 22.9% to $4.9 million for the first quarter from the comparable period of 2007, due primarily to the increase in our billable subscriber communicator base. Product sales decreased in the first quarter by $1 million or 49.1% from the first quarter of 2007, due to a decline in purchases from a large value-added reseller in the transportation sector. Importantly, we saw healthy growth in subscriber communicators adding 29,000 in the first quarter. This also demonstrates less reliance on one customer or supplier. We expect to grow our base of subscriber communicators to increase service revenues. We have maintained our guidance for the year, and this demonstrates that we expect growth to ramp up during the year mainly driven by the OEM business. Costs and expenses decreased 29.5% or $3 million to $7.1 million in the first quarter of 2008. As I mentioned, this includes a gain from the settlement of claims for ORBCOMM Japan of $876,000 comprised of cash and a 37% equity interest. The settlement gain resulted from distributions related to a rehabilitation plan involving ORBCOMM Japan. ORBCOMM Japan is an excellent platform for growth in the Asian region, and we are moving to increase our stake in ORBCOMM Japan to gain an additional equity interest after we signed an amended license agreement. The additional equity will give us a 51% ownership stake and we expect to consolidate ORBCOMM Japan starting in the second quarter. ORBCOMM Japan has approximately 11,000 subscribers that are already recognized and building on the ORBCOMM switch and at this point we'll be able to capture additional revenues (inaudible) generated above our normal wholesale charges and we expect that to raise ARPU. Costs and expenses in the first quarter of 2008, excluding the cost of product sales and the gain on customer claim settlement, decreased 16.1% or $1.3 million over the first quarter of 2007, and this was primarily due to decreases in stock-based compensation of $1.1 million and professional fees of around $400,000, partially offset by increases in other employee costs. The stock-based compensation decrease involves some carryover expenses from the 2006 equity grants that made the expense in the first quarter of 2007 slightly higher than normal and that didn't repeat in 2008. These year-over-year cost reductions showed that our business model is capable of growing service revenues while keeping expense growth to very moderate levels. We believe future expense growth would continue at moderate growth levels in the upcoming quarters of 2008, with the exception of the increased depreciation related to the launch of Quick Launch satellites and that will add approximately $4.2 million annually and that will be on a pro rata basis for 2008 based on the launch dates of the satellites. Net loss was reduced to $500,000 for the first quarter of 2008 compared to a net loss of $2.9 million in the prior year period, an improvement of 81.8%. ORBCOMM's net loss per common share was $0.01 for the three months ended March 31, 2008 compared to a net loss per common share of $0.08 for the prior year quarter. While EBITDA was negative, our adjusted EBITDA and that's defined by us as EBITDA less stock-based compensation was positive in the first quarter. EBITDA is an important non-GAAP metric we use to gauge our performance and manage our business. It is tracked closely and used for management reporting purposes. Again, please refer to our press release and form 10-Q for a reconciliation of non-GAAP figures to GAAP results. EBITDA loss for the first quarter of 2008 was $600,000 compared to an EBITDA loss of $3.6 million in the first quarter of 2007. This is an improvement of $3 million in the quarter or 83.4%. Adjusted EBITDA for the first quarter of 2008 was positive $200,000 compared to an adjusted EBITDA loss of $1.7 million in the first quarter of 2007. This is the second consecutive quarter of positive adjusted EBITDA. Adjusted EBITDA is adjusted only for large non-cash stock-based compensation component, and therefore it's a good proxy for our operating cash flow. The improvement in adjusted EBITDA would have been significant without the settlement gains as I described earlier, which demonstrates that adjusted EBITDA improves significantly with the growth in service revenues, but certainly the gain was a significant component. We continue to expect to have positive adjusted EBITDA for the full year and that's consistent with our previous guidance. Billable subscriber communicators are defined as subscriber communicators that are shipped and activated for usage in billing at the request of the customer, without forecasting a timeframe from when individual units will be generating usage and billing. It now includes terrestrial as well as satellite units. As of March 31, 2008, ORBCOMM had approximately 380,000 billable subscriber communicators compared to 351,000 billable subscriber communicators as of December 31, 2007, and that's an increase in the base of 8.1%. Billable subscriber communicator net additions of nearly 29,000 units for the first quarter of 2008 represented an increase of 12.8% over the net additions of billable communicators in the first quarter of 2007. We are maintaining the 2008 guidance previously issued. For 2008 we expect net additions of billable subscriber communicators of between 170,000 and 190,000 units, representing an increase of between 48% and 54% to the total subscriber communicator base. This growth in the subscriber communicator numbers is expected to grow our service revenues between 30% and 45% for a total of between $22 million and $25 million. As I mentioned, we expect positive full year adjusted EBITDA for 2008. Let's just take a quick look at the cash impact on the new satellite contracts before we take questions. Our new contract is for 18 satellites costing $117 million and that excludes launch and insurance costs. The milestone payments are expected to occur roughly in this order. As we've pointed out, we've in the past given guidance on where we think the CapEx spending is going to be and we'd like to provide a little more clarity on that. For 2008, there's roughly $30 million in satellite milestone payments. There's approximately $10 million of other CapEx for this year, and this amount is roughly in line with our previous disclosures. In 2009, roughly $25 million is for satellite milestone payments, with an additional $5 million to $8 million for other CapEx programs. This total is lower than we previously thought, and this was based on a better milestone payment schedule that we had previously anticipated. In 2010, $42 million is for satellite milestone payments. At this point we'll roughly be at 83% of the contract value. We are also expecting one or two launches in 2010, depending on our business needs or the potential slippage in the milestones, which we're not anticipating, but we will add launch costs in 2010. The rest of the CapEx for both the satellite program and our terrestrial components really occurs in 2011 and beyond. So, we expect that cash from operations will be sufficient to fund the additional $30 million to $40 million needed for the two launches and the other CapEx. In addition, we have negotiated a credit facility in the satellite contract provided by the prime contractor. This facility will work similar to a standard ADL line backed by our receivables. While we don't anticipate needing this credit facility, it's a good precaution. We also have the option of lining up our own credit facility should it be needed. Again, we're also not anticipating needing it. Finally, we may be able to time the launches of the satellites to coincide with our business needs as well as time the CapEx spending of the terrestrial components. So, that's a brief overview of that and we will be happy to take your questions.

[Operator:]

(Operator Instructions) Your first question comes from Tom Watts of Cowen & Co. Sir, go ahead.

[Tom Watts:]

Good morning. How are you?

[Robert Costantini:]

Hi, Tom.

[Tom Watts:]

Could you just give us a little bit more color on ARPU? We saw the decline there and what's the mix of those products and what sort of levels should we be looking at going forward?

[Robert Costantini:]

Yeah. There was a decline. Part of that impact was the terrestrial units as they start coming online. And the changing of the mix though going forward should see ARPUs rise as the OEM business continues to ramp up this year as we've disclosed that they're typically higher than our average.

[Tom Watts:]

Okay. And then on the OEM business, as I recall, were we looking for it to hit something like 8,000 units a month in the first half? Was that the sort of metric that you're aiming for?

[Robert Costantini:]

Yeah. We're looking for 10,000 a month sometime in the third or fourth quarter and we still think we're going to hit those numbers.

[Tom Watts:]

And to do that, will that require any of the existing OEMs to add more models than they've announced or to add more geographies?

[Robert Costantini:]

It's both. All of those are already planned to get us to those numbers and basically nothing has changed, but as they put on more factories it's definitely both geographical and model based.

[Tom Watts:]

Okay. And then in terms of looking at launch and insurance costs, as we factor those in, should we think of those are going to be on the same order of magnitude as the satellite construction? Could those be $80 million or $12 million? How should we think about those?

[Robert Costantini:]

Yeah, I think what you need to consider is $40 million to $50 million for the three launches, including insurance. We'll have more clarity in the next couple of months with respect to the launch options and that might provide a little bit more clarity. We haven't really disclosed much on that score, but that would be a reasonable range.

[Tom Watts:]

Okay. And then, as you're looking at your cash planning, clearly you have enough cash to fund a good part, initial part of the contract.

[Robert Costantini:]

Sure.

[Tom Watts:]

But, you'll also need cash from ops. How should we think about the requirement from cash from ops say in '09 and '10 to fund the contract?

[Robert Costantini:]

Yeah. Again, as you work it through your model, you've got to look at our growth rate and perhaps you'd look at our adjusted EBITDA to be a proxy for that. The cash from operations essentially starts this year and will rise, I'd say rapidly, through '09 and 2010, so I wouldn't be able to offer you a number at this point, but it would be significant and it would be enough to cover.

[Tom Watts:]

Okay. And if you decided to delay the contract or push back the launches in any way for better cash management, what would be the implications for the service offering or service quality?

[Marc Eisenberg:]

Yeah. It's interesting. I think the first satellites we're not even contemplating pushing back. But it kind of depends on how some of the older satellites are doing and they seem to be doing just fine. As you look overall, the network is actually quicker than it was three years ago, so you kind of wait and see how the other satellites are doing and you can kind of launch as needed, but today after you launch the Quick Launch, service is going to get markedly better because of the speed there and the larger footprints that these have, so you wait and see.

[Tom Watts:]

Okay. Marc, Robert, thanks very much.

[Robert Costantini:]

Okay, Tom.

[Marc Eisenberg:]

Sure.

[Operator:]

Your next question comes from Chris Quilty of Raymond James.

[Chris Quilty:]

Good morning, gentlemen. It has been a busy quarter for you.

[Robert Costantini:]

It sure has, Chris.

[Chris Quilty:]

A question for you. It looks like you actually upped the number of subscriber adds from the original pre-release from like, if I remember correctly, 24,500 up to 29,000. What was that change?

[Marc Eisenberg:]

It was almost 29,000. The 26,000 is satellite only and the other 30,000 something is terrestrial.

[Chris Quilty:]

Okay.

[Marc Eisenberg:]

So, I don't think that number has changed.

[Robert Costantini:]

No. The number hasn't changed. It's just split.

[Chris Quilty:]

Okay. And it looks like after a big surge, which I am assuming was channel in the first quarter that you started offering dual-mode, the numbers have kind of trickled down a bit. Is there some point where you think that those volumes pick up or is it just related to the activities of GE and when they get moving with it?

[Marc Eisenberg:]

Yeah. GE's not impacted by terrestrial, they're a satellite-only customer. But there are couple of things that's bouncing those numbers up and down. When we first launched with T-Mobile, there was some demand that was built-up, so we kind of came out quickly and then we teetered off just a little bit. And in the second quarter, you've got for the first time AT&T coming online, and there are some customers that insist on using one or the other. So, we expect that's a ramp up again in the second quarter with AT&T. And then the third thing that's going to really drive this market is in the third and fourth quarter you've got dual-mode devices coming on. Still to this day the ORBCOMM dual-mode offering is a VAR on it's own, taking this ORBCOMM modem and this terrestrial modem, combining them via a third microprocessor and creating that dual-mode. But when our manufacturers do that work for them, integrate it, lower the price points that also is going to raise the dual-mode business.

[Chris Quilty:]

And by dual-mode coming online, you're referring to the Wavecom?

[Marc Eisenberg:]

All the manufacturers are working on dual-mode devices. Wavecom will have one this year. Quake is coming out with one as well this year, and Stellar as well. So you're going to see a number of dual-mode devices.

[Chris Quilty:]

Got you. And speaking of GE, and I know this is kind of ancient history, but in the 10-K you disclosed that they did not meet the minimum guaranteeds for last year. And can you just give a sense from when you guys had originally put out guidance early mid-point of last year and you ended up coming short of that original guidance, how much of that miss was related to GE not meeting their minimum guaranteeds?

[Robert Costantini:]

Yeah. I would say the significant portion of the miss was primarily related to that situation there. You had a multi-part question there.

[Chris Quilty:]

Yeah. Well, the forward part of the question is what have you put in your expectations for this year given that they again have minimum guaranteeds and it looks like in the first quarter they came up short?

[Marc Eisenberg:]

We actually have less units in the plan for that entire sector this year than last year. So, it's pretty small.

[Chris Quilty:]

Okay. And what's the bottom line? What's driving the activity, or not driving the activity in that sector in terms of adoption rates?

[Marc Eisenberg:]

A couple things. When you look at the transportation business, loads are down, and that's purely based on the economy. And then at the same time, fuel prices are way up and some of the truckers that we see out there, they're getting squeezed. And when you look at GE's business there's two parts of GE's business. You've got the part of their business where they sell to aftermarket guys and that's going well, and then you've got the GE business themselves where they lease trailers or railcars out there to third parties guys to truckers. And it's a surplus business and surplus businesses typically struggle when the economy struggles to a greater extent. And it's not certainly just GE. We're seeing it in most of the cargo type businesses out there. I think there's some good news in the transportation business that we're seeing on the [In-Cap] side. We're actually seeing those businesses go up. And it's interesting, as you kind of look at our other businesses, you say how come ORBCOMM is doing so well in construction? Why is that business up? You'd figure that would be the worst of them all, but as you look at the financials for guys like Caterpillar and Komatsu, while they're not doing incredibly well in the United States, you see worldwide I think Cat reported a 29% increase worldwide, and as you look at ORBCOMM's base, you go back a couple of years and the installations are almost 90% in the United States, and now you're looking today and our business is almost on a growth rate almost 50/50.

[Chris Quilty:]

Okay. Switching gears, if you were to exclude GE, how has the balance of the VAR indirect channel been performing in terms of growth? And do you see any particular vertical markets or activities where you think you might get some favorable growth this year?

[Marc Eisenberg:]

Yeah. You mean everyone but GE?

[Chris Quilty:]

Yeah.

[Marc Eisenberg:]

Okay. If you were to pull out the guys in that transportation sector, particularly cargo, the rest of the business would be up multiples, 200% or more. I mean it's up significantly and then that trucking market, which at one point was the lion share of our business has been dragging it down. And as the other base goes up, when that turns around and those two growth areas kind of meet for the first time on a positive basis, the growth could be explosive. It could.

[Chris Quilty:]

Great. And did you mention, for example, with GE they had a rail tracking program that they were working with, I think with Dow Chemical, and you were having some certification issues? Has that specific one cleared yet?

[Robert Costantini:]

Yeah. Well, that didn't come from us. I'm not aware that GE's working with Dow Chemical. But I know another reseller who is. So, I think the technical hurdles are behind them. ORBCOMM today has two approved rail solutions out there in that business and it's not just like a cargo type monitoring device. It's a device that monitors hazardous material, so it's got much stiffer requirements than most other ORBCOMM devices out there. But we've got a couple devices in the market, and we've certainly got our sights set on rail. We think it's a good market.

[Chris Quilty:]

Okay. Great. Thank you, gentlemen.

[Robert Costantini:]

Sure, Chris.

[Operator:]

There appears to be no further questions at this time. I will now turn the floor back over to Marc Eisenberg for any finishing remarks.

[Marc Eisenberg:]

Thank you all for joining us today, and thank you for your questions. We look forward to launching some satellites and speaking to you next quarter. Thank you.