Louis Dipalma

Louie D DiPalma inquired about the funding environment for the defense and intelligence business, specifically whether it is improving or expected to remain strained after the government shutdown, and sought clarification on the assumptions baked into the civilian guidance regarding the shutdown and potential further cuts. He also asked about the stabilization of the civil business from the September quarter relative to the June quarter.

Answer

Horacio Rozanski (Chairman, CEO and President) explained the bifurcation of the market, noting the challenging civil market with procurement delays and a stronger, though still frictional, national security environment with slower ramp-ups for new wins. Matt Calderone (EVP and CFO) clarified that the civil guidance assumes no further cuts but a competitive procurement environment, with the business feeling 'stabilized' after significant prior reductions. Kristine Anderson (EVP and COO) confirmed the civil business has been steady since earlier reductions but the environment remains slow, with productive conversations for future growth.

Louis DiPalma sought clarification on whether Iridium plans to explore strategic options or if its phone line is simply open. He also asked about Aireon's involvement in the FAA's air traffic control modernization, the availability of chipsets for Iridium's narrowband non-terrestrial network (NTN) solution, and the timing of the Deutsche Telekom roaming partnership going live, as well as if these chipsets would be mass-market smartphone chipsets.

Answer

CEO Matt Desch reiterated that Iridium will pivot to use its growing cash flow for acquisitions and investments in unique areas to ensure long-term growth. He confirmed discussions between Aireon and the FAA regarding air traffic control modernization, particularly for areas like Alaska and the Caribbean. Mr. Desch stated that chipsets for Iridium NTN Direct will be available next year (with prototypes currently existing) and the service is planned for 2026, likely in the latter half. He clarified that these will be mass-market chipsets, like Nordic, incorporating Iridium's capability alongside terrestrial and other satellite spectrums.

Louis Dipalma of William Blair & Company asked about the business development pipeline for TRAX, its potential as a sales channel for parts, the status of recent implementations, competitive dynamics of the Navy P8 contract win, and progress on in-sourcing repair work from the Triumph acquisition.

Answer

John Holmes, Chairman, President and CEO, reported strong progress for TRAX with new customer wins and a healthy pipeline, noting AAR's backing is opening doors at larger airlines. He confirmed that in-sourcing work from Triumph to support the USM business is largely complete, and the opportunity to in-source for commercial programs is larger than initially anticipated, though it represents a longer-term effort.