Iridium Communications Inc Q2 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Louie DiPalma - William Blair & Company L.L.C., Research Division - Analyst : First, I hope you and your families are staying well during these difficult times. Second, I wanted to say, nice work on how the Iridium NEXT expense adjustments to operational EBITDA are now 0, which is a positive sign. And third, Tom, I saw that you raised your free cash flow guidance, which is good for your reduction of leverage. And along these lines, I was wondering, how do you expect that the shift in Aireon's free cash flow outlook may impact the timing on when Iridium announces a dividend or a share buyback? Thomas Fitzpatrick;Chief Administrative Officer, CFO Well, so you're referring to the lump sum payment of the remainder of the...

Question: Louie DiPalma - William Blair & Company L.L.C., Research Division - Analyst : Got you. Sounds good. And for Matt, new products and services are definitely a key part of your story that many investors are excited about. You discussed GMDSS, the new Intellian terminal and the Iridium Edge services. Can you, Matt, provide an update on the expected time line for the new 9770 IoT devices and also the low-cost terminals? Has there been any delays in terms of when you expect to roll those out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 28, 2020 / 12:30PM, IRDM.OQ - Q2 2020 Iridium Communications Inc Earnings Call Matthew Desch;CEO Yes, there hasn't been any delay. By the way, I should remark your -- thank you for saying nice things in terms of our health. That's been a -- it's been a very big focus, obviously, in the company to make sure all our employees and others are healthy and safe. I will tell you, we've all learned how to work remotely, and we've found it surprisingly effective and productive. We're really getting -- it hasn't affected development schedules or really just about anything in the company. In fact, many of my employees are remarking that they're even almost more productive and, certainly, appreciate that with all the uncertainties with family care and all that sort of thing. I will say, Tom and I have been talking, we probably can reduce a little real estate long term here. And possibly even move into kind of a new environment long term, which I think is probably just where everybody is going these days. So that's just one aspect. As far as the 9770, you will -- for those who don't know, that's our new small form factor, mid-band modem that kind of is going to be the first of a number of different radio products to drive additional ARPU into the IoT and voice and data segments because it enables more speed, but it's still very small and compact and uses a very small antenna. Those are in beta trials with a bunch of partners this summer. They have been reporting that worked very well. We expected -- because it's going to get built into kind of complicated products that we'd start seeing the first of those towards the end of this year and into 2021, and it will be made increasingly available beyond the first kind of 10 beta partners to more and more partners later this year who will start building them into products that could come out later in 2021 and 2022, including things like a new handset, including a new device that would be much faster than our existing hotspot product, the Iridium GO!, including faster IoT products that would enable things like pictures and richer services. So those are still on track. They -- like I said, we're just starting the additional lower -- the much smaller modems, the much lower cost devices, those aren't going to really come until 2021 and '22. We're just really getting started into the series in terms of new handsets, which will refresh our handset line and provide a richer service experience for those who want a very, very simple kind of satellite phone experience, that sort of thing. And those things all come -- this 9770 is important because it's kind of the parent of all those devices, which is why we wanted to get it right. And it's fully developed. It's manufacturable today. We're just making sure it works in every kind of environment of our partners before we really turn on the spigot late this year and into early 2021 for everyone.

Question: Louie DiPalma - William Blair & Company L.L.C., Research Division - Analyst : Great. I am glad you and all of the Iridium employees and your families are generally doing okay.