Hughes Communications (HUGH)
Q1 2010 Earnings Call
May 5, 2010 11:00 am ET
Deepak Dutt - VP, Treasurer & IR
Pradman Kaul - President & CEO
Grant Barber - EVP & CFO
James Ratcliffe - Barclays Capital
Jennifer Fritzsche - Wells Fargo
Chris Quilty - Raymond James
Larry Harris - C.L. King
Matthew Barnett - Jet Capital
Previous Statements by HUGH
» Hughes Communications, Inc. Q3 2009 Earnings Call Transcript
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Good day ladies and gentleman and welcome to the First Quarter 2010 Hughes Communications Incorporated Earnings Conference Call. My name is Michelle and I’ll be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Deepak Dutt, Vice President, Treasurer and Investor Relations Officer. Please proceed.
Thank you, Mitchell and good morning everybody. Welcome to our first quarter 2010 earnings call. Before we begin I would like to remind everyone that this call including the question and answer session may contain statements that are forward-looking as that term was defined by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on management’s current beliefs as well as assumptions made by and information currently available to management and are subject to risks and uncertainties. Actual results may differ materially from those contained in these forward-looking statements and we refer you to the documents we filed time to time with the SEC, specifically our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our periodic 8-K filings including the 8-K to be filed with this press release and our registration statements on Form S-3.
Let me now introduce the management team joining the call. Its Pradman Kaul, President and CEO and Grant Barber, Executive Vice President and CFO.
Let me now hand it over to Pradman for his opening comments.
Thank you Deepak, good morning. I’d like to start with a few highlights in our performance in the first quarter and then get to specifics for our different businesses. First, we once again delivered strong growth in adjusted EBITDA driven largely by outstanding performance in the consumer business. The adjusted EBITDA for the first quarter was a record $43 million up 30% growth over Q1 of 2009.
Secondly, our strategy of leveraging combined service and [hardware altering] continues to enhance our competitive positioning and fuel strong service revenue growth. Our total services revenue grew by an impressive 16% over Q1 ‘09. And if you excluded the revenues from Telematics from ‘09 the growth was actually even better at 21%.
Third, the company once again delivered positive net cash from operations enabling us to end the quarter with a healthy cash and marketable securities position of $253 million.
Now I would like to hear some highlights of our businesses. Our consumer business once again led the way this quarter with over 57,000 gross ads while churn improved to a record 1.98% the first time that has dropped below 2%. It has resulted in record first quarter net ads of 27,000 a growth of 19% over Q1 ‘09. Consumer RPU increased to $72 versus $68 in Q1 ‘09. And as a result total revenue from the consumer business grew by 15% and service revenue grew by 42% over the first quarter of last year. we added a record net of 48,000 subscribers onto our [key event] SPACEWAY 3 satellite and we ended the quarter with nearly 292,000 subscribers on SPACEWAY and over 530,000 total subscribers. As in the past, this business continue to be our premier growth and our strategy of activating new customers onto SPACEWAY and I am releasing least Ku-transponders continues to expand our margins and adjusted over as evidenced by the first quarter results.
Enterprise revenue declined marginally once again due to enterprises delaying the decision to refresh their hardware and we believe due to the lingering effect of the recession. However enterprise services business, you remain strong globally with growth of 16% in North America and 22% in the international services revenue. With strong performance from our international service subsidiaries mostly notably preserve. We were awarded new orders of $238 million of Q1 a growth of 10% over the same quarter last year.
Key North American enterprise orders included a major platform upgrade, orders from those orders from the lottery operated GTECH for the New York and New Jersey state lotteries and follow on orders from T.J. Maxx, Conoco Phillips, and Denny. Internationally, we were awarded $20 million follow on order by leading Brazilian cellular operator from back call services for their cellular network and an $18 million follow on order from Avanti Communication for advanced Ka-band networking infrastructure for their HYLAS 2 satellite.
We also received major orders from Telefonica in Brazil, SREI in India and Bentley Walker in Europe remain just a few. In our Telecom Systems business we received the follow-on order from Globalstar and signed a contract for supply of an initial 350 satellite terminals for a major utilities [feed force] automation system.
We expect to receive additional expansion orders from the utility in the coming quarters. At our Q4 call I had also mentioned that we have started penetrating the US government market both civilian and military and that our initial efforts have met a good success. As an example, in this quarter, we received a $2.6 million order from the Government Education and Training Network. We expect to see significant revenues in the next few years from this part of our business.