Kenneth Levy - VP, IR Matt Desch - Chief Executive Officer Tom Fitzpatrick - Chief Financial Officer and Chief Administrative Officer.

James Breen - William Blair & Company Gregory Burns - Sidoti & Company Andrew DeGasperi - Macquarie Research James McIlree - Chardan Capital Markets Ric Prentiss - Raymond James & Associates.

Welcome to Iridium's First Quarter 2017 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to hand the floor over to Ken Levy, Vice President, Investor Relations..

Thanks, Karen. Good morning, and welcome to Iridium's first quarter 2017 earnings call. Joining me on today's call are our CEO, Matt Desch, and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our first quarter results, followed by Q&A.

I trust you have had an opportunity to review this morning's earnings release, which is available on the Investor Relations section on Iridium's website.

Before I turn things over to Matt, I would like to caution all participants that our call today may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are statements that are not historical facts and include statements about future expectations, plans and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks, which could cause actual results to differ from forward-looking statements.

Such risks are more fully disclosed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks.

Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or expectations change. During the call, we'll also be referring to certain non-GAAP financial measures.

These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release on the Investor Relations section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, let me turn things over to Matt..

Thanks, Ken. Good morning, everyone. So you can see, 2017 is off to a good start. Business is running well. We made significant progress with the deployment of our first Iridium NEXT satellites and we're now planning for our second launch in June.

I want to use today's call to provide an update on Iridium NEXT and then touch on some of the first quarter business highlights before turning things over to Tom. First off, I'm happy to report that our initial batch of Iridium NEXT satellites are now fully operational and working very well.

We went through an extensive checkout process before putting these into the constellation. Each satellite was tested thoroughly both individually and in conjunction with all our other satellites. Primary and hosted payload functions have also been tested extensively to ensure these and future satellites will work as designed once launched.

We completed the commissioning of these Iridium NEXT satellites about a week ahead of schedule which is a real testament to the planning and preparation of our satellite operations team.

What's important is that our experience with in-orbit testing, slot swaps and the new satellite performance gives us confidence that we'll be able to manage the roughly 60-day launch cycle that SpaceX is targeting following the second launch.

In all I'm very pleased with the execution of Thales Alenia and our operations team, and I congratulate them both on all the good progress so far.

Of the 10 satellites we launched in January, 8 were placed into service in plane 6, while 2 satellites have begun a 10-month journey to an adjacent plane as part of a highly choreographed process that will eventually get all the satellites into their proper positions at the earliest possible time.

We continue to expect that the Iridium NEXT constellation will be fully operational in mid-2018. This outlook is predicated upon our second launch in June, and SpaceX's execution of Iridium NEXT launches about every 60 days thereafter.

Based upon the launch success and turnaround SpaceX has demonstrated this year, they should be able to keep to this cadence. Each of the 8 Iridium NEXT satellites we put in service so far are not just working well, they're providing our customers better service.

The satellites’ faster processors, larger memory and modern engineering design are delivering better voice quality as well as faster data throughput for our maritime, aviation and IoT customers. While our current network is performing amazingly well for its age, the statistics for our newest satellites are even better.

I can't wait for the coming launches and the impact that additional NEXT satellites will have on the overall network performance and that's even before we introduce new services. The offshoot of our successful launch campaign is that we must also plan for and execute the De-orbit of legacy satellites being removed from the constellation.

I thought you might find it interesting the methodology we're taking for de-commissioning our Block 1 satellites now that we have started that process to give you insight into the effort and care we're taking to execute on this part of the mission.

As I've described before the process of replacing a legacy satellite with an Iridium NEXT satellite is called a slot swap and it follows a precise sequence of steps to ensure service continuity.

As the new Iridium NEXT satellite is cross-linked into the constellation and L band services are engaged, the new and the old satellites remain co-located for a short period.

Based on the health and operational capabilities of the legacy satellite, we'll either start an immediate de-orbit or move it into a temporary storage orbit, approximately 20 kilometers below the operational constellation.

Those legacy satellites lowered to the storage orbit will be maintained as contingency measure until all 75 Iridium NEXT satellites are placed into service. And as a practice we're keeping the best of the legacy satellites in orbit as either operational satellites or as temporary spares, and then we'll de-orbit the rest pretty quickly.

For example, of the 11 satellites in plane 6, 8 are the new Iridium NEXT satellites from the first launch and 3 satellites are the best performing legacy satellites that we’re operating in this plane. Of the 7 remaining legacy satellites we removed from service, we plan to put the 2 best in the temporary storage orbit as backups.

For the rest of the old satellites our operations team follows a methodical de-commissioning process to de-orbit and safely retire them from lowered orbit.

Each of these satellites we de-orbit will follow NASA recommendations with a scripted series of thruster burns to utilize all their fuel to put them in the lowest orbit possible where they will then automatically deplete or passivate their batteries, open their electrical relays and propellant lines and position their solar arrays for maximum drag, so that the satellites will burn up in the atmosphere.

We're expecting most satellites will burn up within a year or less after completing this process. A few weeks ago, the first of our block 1 satellites, SV40, was de-commissioned this way, and we are planning for the second and the third to occur in the next few weeks.

We will continue this process for all legacy satellites that we aren't using as temporary spares and will eventually de-orbit all the block 1 spares after Iridium NEXT is completed next year.

So moving back to building and launching the new satellites to date Thales Alenia has manufactured over 40 Iridium NEXT satellites and production continues to track to complete all satellites around year end. Thales and their partner, Orbital ATK are doing a good job on production, and we should have plenty of satellites ready for each launch.

As far as the second launch goes, SpaceX has informed us that they have scheduled our launch for Thursday, June 29, just a few minutes after 1:00 p.m. Pacific time. That launch will be into plane 3.

Vandenberg has also confirmed the 29th, so satellites will start shipping to the base in about 2 to 3 weeks to begin processing as the dispenser and the payload adapters are ready and on-site.

With SpaceX’ increasing cadence on production and launch, they've also provided us launch dates for 3 more launches in 2017, in August, October and December so we're hoping they stay on track as we're ready to deploy satellites as soon as they can launch them. Moving on to our business results.

The first quarter came in on plan and in line with our expectations. IoT subscriber growth remains strong and in a much faster pace than last year, led by several of our larger and newer customers. Year-over-year, M2M subs grew 67,000 or 18%.

This continued impressive growth reflects strength from new business partners and growth from existing partners like Caterpillar and Garmin.

We continue to have the best satellite IoT product in the industry, and with Iridium NEXT now deploying, we're starting to win new business with global partners, which can diversify our existing subscriber base further.

Last month, Honeywell announced that it adopted Iridium satellite solutions to help its government and commercial customers monitor remote assets and human capital. Honeywell workflow solutions will roll out a line of connected worker products to monitor the location and safety of workers in remote locations.

This new partner is another example of bigger IoT players who may have worked with other satellite IoT networks in the past and they're now moving to Iridium for our reliability and enhanced quality as we launch our next-generation constellation.

Last week, we announced another new partner like this with Lindsey Manufacturing, who provides smart grid solutions to the energy sector. They will combine Iridium's global connectivity with their transmission line analytics solutions which is a unique satellite IoT application. In fact, we're not aware of another partnership of this type.

This will allow for a dynamic electricity routing and power management in time sensitive markets. Lindsey has identified global opportunities for their products using Iridium that extends and improves the efficiency of the electrical power grid particularly where cellular doesn't work.

In the first quarter, we maintained our strong momentum with the U.S. government. Our subscribers grew 15% from the year-ago period to a record 86,000 users. We have also have a number of important business development and engineering projects underway with the DoD.

With our EMSS contract with DISA slated for renewal next year, we anticipate that our negotiations with U.S. government will take shape later in 2017 and pave the way for another win-win contract. Development of Iridium Certus terminals and equipment continue to progress well.

In the past, Iridium has only played at the low end of the broadband space, but the rollout of new equipment from world-class partners will harness the full capabilities of our Iridium NEXT satellites and allow Iridium to really set a new standard in L-band satellite broadband for maritime, aviation and land applications.

Last month, we visited with many partners and new business relationships at the Satellite 2017 Trade Show. At the show, Thales announced and showcased some of their new Iridium Certus products, which they branded mission-link, flight-link and vessel-link for the land, aviation and maritime markets, respectively.

Other trade show participants also voiced their excitement about Iridium NEXT and the impact that reliable L-band broadband service will have on their businesses and the markets they serve.

As we move through the year, you'll hear more about Iridium Certus from our other VAMs like Cobham, L-3 and Rockwell Collins, as they publicly announce the Iridium Certus products they're developing. The first Certus products are slated for customer trials later this year as we all prepare for commercial launch early in 2018.

We're also moving quickly to finalize selection of service partners who have committed to sell Iridium Certus to their customers. We look forward to converting on their interest in selling Iridium Certus over the next few months. And finally, Aireon continues to make nice progress with its business development and certification.

With a handoff of payload control from Iridium in early March, Aireon completed initial flight testing with the FAA, NAV Canada and company-sponsored inspection aircraft to validate the performance of its space-based tracking and surveillance services. Everyone has been very pleased with the results.

In fact, you may have seen yesterday's release on Aireon's testing with the FAA. They reported that their testing in the Washington and New York flight information regions last month was a success. And that's good news as it's a particularly high-density and challenging environment.

And of course it's good news that the FAA continues to make progress in their evaluation of the Aireon service. In February, Aireon agreed with Airways New Zealand to explore operational validation in the South Pacific. And in March, they signed new agreements with the ANSPs of Spain and France to evaluate satellite based ANSP surveillance services.

Together, Spain and France [surveil] [ph] more than 5 million flights per year and managed several million square kilometers of airspace both inside and outside of Europe. Overall, Aireon has an impressive list of MOAs and data service agreements with customers who represent a big share of the world's global airspace.

I thought it was kind of poignant when last week Malaysia Airlines became the first airline customer to sign up for SITA’s real-time tracking service for airlines, powered by Aireon data through FlightAware.

Malaysia Airlines will get minute-by-minute positioning updates of its global fleet so they can know the real-time position of every aircraft and customer. You know, the tragic event of 2014 was a wake-up call to the whole airline industry.

Malaysia Airline continues to look for technology what will improve safety, and its adoption of this flight tracking service is a testament to Aireon’s one-of-a-kind solution, and how its' revolutionizing the aviation industry. On the funding side of its business, Aireon has been active with advisers and bankers.

We expect Aireon to commence its formal capital-raising activities this summer, setting the stage for a possible hosting payment to Iridium later this year. They are already starting to pay data fees as new satellites go into service.

So continued execution on the Iridium NEXT mission remains our central focus this year, and we feel very good about the momentum we have with the new development partners and business opportunities. Before I pass things over to Tom, I just think it's important to note how much progress Iridium has made since we became a public company in 2009.

At that time, I was hearing from investors a host of concerns about the potential decline in the health of our constellation network, our ability to grow in the face of competition, the likelihood that Iridium NEXT would overrun its $3 billion budget, and whether our selected launch provider, SpaceX, would ever fly.

Fast forward 7 years and we have largely addressed all of these concerns while growing our subscriber base by 2.5x and nearly doubling our operational EBITDA. Our team has shown the ability of effectively retire risks and address any issue that comes our way.

We will continue to do so as we get ever closer to our coming financial transformation next year. I appreciate the ongoing support of our longtime shareholders and look forward to our next call in July to report out on our second launch and share further details on how we are progressing towards our financial goals.

So with that I'll turn it over to Tom..

first, Thales has agreed to defer $100 million of individual milestone payments on Iridium NEXT through the first quarter of 2019. This arrangement will be financed at the rate of LIBOR plus approximately 250 basis points and require Iridium to pay $1 million up front cash fee.

Second, lenders to the COFACE credit facility have agreed to delay $98 million in payments into the debt service reserve account until March 31, 2019. This figure is a combination of delayed payments and access to some funds that Iridium has previously paid into the DSRA as restricted cash.

The arrangement also places restrictions on our use of funds received from Aireon with respect to $200 million in hosting fees. Any such payment in excess of $50 million will be used to proportionately repay Thales, to defer [indiscernible], and replenish the DSRA.

The final component of these deals is the suspension of Iridium's preferred dividend on its Series A and Series B preferred stock. This action almost $20 million in liquidity over 5 quarters. After which, we intend to resume making preferred payments.

In total, this arrangement will provide the cushion we need to absorb an Aireon delay of payment well into 2018. We will need to have collected the Aireon hosting fee by the end of the first quarter of 2019 or made other financial arrangements to repay Thales and fund the DSRA at that time.

However, based upon the terms and expected timing of these liquidity deals, and the state of credit markets generally, I'm quite confident that our funding plans for Iridium NEXT are in good shape.

As a result, we do not anticipate any liquidity issues in 2017 and anticipate that the deals with Thales and Koufax will provide Iridium's sufficient liquidity well into 2018, even without the Aireon hosting payment.

I want to thank Thales and COFACE lender banks, who have been very supportive of the Iridium NEXT program and great partners in getting this bridged. We feel very good about Iridium's business transformation and look forward to our next launch in June. With that I'll turn things back to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of James Breen from William Blair..

Just a couple of questions. One, Matt, can you just talk about the process you've gone through so far with getting the data from the satellites that are up and providing that for Aireon to help them get their funding in place? And then just for Tom, you just talked about the release you got on the debt side to provide some liquidity.

It seems like it's more than what you would need over that time frame. I just wanted to hear your thoughts on the total package..

In terms of the 8 payloads that are active, after we checked out all the satellites we really turned over complete control of that Aireon payload to Aireon and their partner, Harris, for their use.

They can configure it, they can manage it, and it very quickly started providing lots and lots of data, because every aircraft essentially underneath that payload is visible to it. And they've been just storing away since that time, tons and tons of aircraft tracks.

Of course as I said, they've been testing those against actual aircraft on the ground, including FAA's flight test that we announced as well. Like I said they're really, really pleased with the performance of the payloads. They're telling me that they’ve kind of exceeded the specification that they originally set up.

They're demonstrating really being able to see aircraft in some cases over the horizon, which means it's a much bigger coverage zone, which means the overlap will be even greater, which means even faster pick up and better real-time performance.

So all in all, it’s meeting all their objectives and I think that's really helping them both with their sales plans, because they can now go to a customer and show them all the areas of their flight regions that they could never see before, which makes it very real, which is going to I think accelerate their MOAs and DSAs for future customers.

But in addition, it's obviously been a big confidence builder for all those that they've signed up so far. All that said, they have now been, as I said, engaging bankers and have been out doing due diligence. That process seems to be going along smoothly very well.

And they're reporting [indiscernible] positive approach that should be sometime this summer that they engage investors in that. So hopefully that will be go very well and that will be good for all us..

This is Tom. As to the amount of the bridge financing, we worked very closely with the COFACE lenders and representatives for the French Treasury. And I would characterize they are interested - being very interested in ensuring the sufficiency of Iridium's liquidity, as that was our interest.

We settled on this amount and this arrangement as the amount that does that comfortably. And we look at the all-in cost of this bridge financing. It's inside 250 bps, which is very attractive, very friendly kind of financing in terms of the interest rate that's being extracted.

And so if it's little bit more than what we need, that's only good news from our perspective..

And our next question comes from the line of Greg Burns from Sidoti & Company..

When we look at the service revenue growth this quarter a little bit below what you're looking for the full year.

Can you give us a little bit more color on where you expect that incremental growth to come from throughout the year?.

So as we said, hosting revenues come in back ended [indiscernible] satellites launch. So if you're just looking at run rate growth in the first quarter of 2, how to get to 3 to 5, the hosting revenues are more back ended as is our relationship with Thales. So those are the 2 kind of elements that bridge you from the 2 into 3 or 5..

Okay.

Do you have an estimate on how much hosting and data service revenue you expect to recognize this year?.

Yes. We quoted mid-single-digit millions..

Okay.

And I don't think we've talked about this in a while, but in the maritime space, GMDSS certification, is that progressing? Do you have any line of sight on that?.

Yes. It's a long process because it's never really been done for, I think, for 30 years since the last time it's been done. So we're kind of having to write the rules and work through the process. It's going on track.

Our Certus suppliers particularly are interested in that so they're feeling comfortable that that we'll be getting GMDSS certification as the new Certus terminals come on line in 2018, '19. We're going to be demonstrating this year the service through the terminals to the emergency centers and really showing how we will do the service.

But it's a long sort of political – well, it’s probably not the right word, it's a bureaucratic process that sort of takes to go through as meetings are only scheduled at these international bodies every very periodically, and you kind of have to just line up with each one and then submit the paperwork and go through reports and all that sort of thing.

But really pleased with how it's performing. There's been no surprises really in their last year, 1.5 years. It's hard for as a CEO to see things not go faster, but I can't really push an international process any faster. So I think it's going really well..

Our next question comes from the line of Andrew DeGasperi from Macquarie..

First, Matt, can you maybe comment on the partnership you have SITAONAIR and - from Malaysia Air. Is this something that you foresee expanding to other airlines? And then maybe secondly, Tom, could you make let us know what sort of the ARPUs were down on both voice and IoT business. I was just wondering what was impacting that..

It's not our relationship. It's Aireon's relationship with SITAONAIR but obviously it's a demonstration of the value of Aireon services so that's why it's [relevant] [ph] to us.

That was part of the previously announced relationship with FlightAware which is sort of a -- this is not the core part of Aireon's service where they provide air traffic control services, realtime air traffic control services, but they're taking the data and they're providing other uses of it.

So this is the first and I think there's going to be others of the way that they sort of exploit this real-time flight-tracking data, and in this case, it's a private service to allow airlines to monitor and manage their fleets more effectively.

And FlightAware of course has been -- already has had a long-standing relationship with – well, longstanding being they're fairly a new company, but they provide information to airlines today with their relationship now with Aireon they're providing this whole new service that enhances that and gives global service, so they're not having to just sort of estimate where airplanes are when they're outside of coverage.

They actually know where every airplane is. And then SITA will then supply that through their relationship, in this case, to Malaysia, but I think a number of airlines are going to be picking up that service, because they just want to know where their airplanes and customers are at all times.

It'll help them manage arrival information or help them manage catering and maintenance and that sort of thing. So it’s just a nice add-on business, if you will, to the Aireon core business..

As to the ARPU let's separate the voice and data ARPU from M2M because what's going on in those two areas are completely different. In the voice and data, what you have was about $1 of erosion from 40 to 39 in the first quarter. And that trend has been a chronic trend. If you go back 5 years, that is a downward sloping line.

$1 is frankly less than we've run in previous years. The issue in commercial voice and data is sort of an acute issue in respect of I don’t know 25% of our installed base in that segment, which are so-called LBT or L-band transceiver customers who are very heavy data users.

And the long-term trend has been they have disconnected or used less, because it was more economical to use other solutions.

The good news is that our base of that kind of revenue is a fraction of what it was sort of 5 years ago, and we're down to the levels now where its ability to put that much pressure on our ARPU has been greatly diminished just because it's so much smaller of a piece of our business.

So I would - I think about commercial voice and data revenues as sort of down $1 in each of the next 3 quarters this year. I see them down less than that if down at all as we go into 2018, just because that kind of trend has run its course in our view. Now M2M is a completely different story.

We have said for some time that M2M ARPU is a downward sloping line, and that frankly is, we're fine with that. We care about M2M revenue growth. There's no cost to acquiring that business.

Partners like Garmin who are adding significant amounts of subscribers albeit at a lower ARPU than our installed base, we take all the business like that that we can get because it's very profitable, recurring revenue and so we think about the M2M or IoT ARPU as you are going to see a continuation of that trend sort of at the run rate that you're seeing it.

I think we were down $1 year-over-year in a quarter in M2M from 14 to 13. And I would model it similarly as you look out sort of into 18..

Our next question comes from the line of Jim McIlree from Chardan Capital..

I just want to make sure I understand the EMSS contract. That expires in October of 2018.

Is there -- is that the last of the option here? Is that right?.

That is the end of the fifth year, and then they have the right to sort of extend that if there wasn't a contract for another 6 months at the same final pricing that they choose to do it, though our goal will be to replace that contract with a new multiyear contract at the time..

Right.

And so is it reasonable to expect that the new contract will be similar to the old, and that it's fixed price with unlimited subscribers, or that under discussion as well?.

Everything is negotiable I suppose. But I can tell you from every discussion that I've had, and I've had many including very recently, there's no interest in changing the structure of the contract by the government. They really like the fixed-price approach.

It really provides them a lowering cost per customer and the ability to kind of look at using Iridium more broadly and many more things, so they like the approach to be more about just what the price is really overall and how long a term it is. It would be fixed.

It's still also being discussed to some of the same services, voice, secure voice, tactical radio services, low-speed machine-to-machine, the discussions will be around services like higher-speed services, higher-speed IoT, satellite time and location services.

Other things that they would like to perhaps add as to whether those go into EMSS contracts or those are separate contracts. We've already both agreed that Iridium Certus service these, and there's a lot of opportunity for higher-speed L-band broadband in the government in areas we've never played before, so we're really optimistic about that.

That will really be a separate contract to the EMSS. Of course, we don't just make those kinds of services fixed-price. So that's the overall service thinking going forward on the EMSS..

Tom, you mentioned this gateway of -- the gateway revenue under the engineering and support.

How how long does that last?.

It's actually a separate parallel contract with the same period. It's also 5 years. So it's also gets renegotiated at the same time and would be also viewed as a multiyear going forward, new contract with support services..

So let me just break that apart, Jim. There is that which is included in our engineering and support revenues, which is kind of fixed and contractual.

That which is episodic is when we get hired for sort of one-off improvements to the gateway, and so there's kind of fixed component which is the regular way support of the agreement, and I think we quoted as $34 million over 5 years or something like that. So 1/5 of that.

And then you'll see it spike around when they just sort of put a work order for some certain defined functionality that they want us to build. If that makes sense to you..

No, that’s perfect, thank you so much. That’s very helpful, I appreciate it..

In fact one of the key kind of episodic things has been, this last year and this year, is the work being done on a new secure handset. We sold the same handset to the U.S. government for 15 years.

It was getting along in the tooth, and they really wanted to take advantage of the advances that we've made with our commercial customers with a platform like the 9575 Extreme.

So more [indiscernible] provides for a secure sleeve and that coming to fruition here really in the next few months and will be new equipment into government as they take up those new secure handsets and utilize them around the world..

Our next question comes from the line of Ric Prentiss with Raymond James..

Two if I could. You mentioned the Certus product and that, that wouldn't be a fixed price with the government.

Can you update us on the Certus product, more maybe along the lines of the products themselves? When do you expect to have devices and handsets be able to be put in the marketplace as you roll out the next constellation? And then a second question, speaking of the constellation, CapEx seemed a little late in the quarter.

Can you update us how we should think about the timing of CapEx as you go through '17, '18?.

To your first question on Certus products, as I mentioned, we've actually - some of our partners have been demonstrating, they've been showing their products, prototypes of the products, to their customers at industry shows. Thales was the one I mentioned.

Those products -- I know at least 2 products in the second half of this year will be out and in demonstrations and beta trials. They'll be on ships in particular. Maybe some threshold applications this year, because the satellite software is ready on the new satellite and will be available this year.

All the gateway upgrades have gone, and so Certus is really coming together right now in the second half of this year to go to completion. So we really want to make sure that gets a lot of time with customers before it's declared commercially ready.

But we believe in the very early part of 2018, first month or two really, it should be all ready, assuming there's no issues with our customers or any of those products.

And we would expect products will be sold and being put on ships that will provide the initial speeds of say 350 kilobits per second which could upgrade to 700 kilobits per second after the network is completed. And there'll be other products that will be coming about as well. That's from at least half of those customers.

The aviation products will be coming out more in 2018 and '19 as they get certified on specific airplanes. And they'll be being tried -- and so I'm expecting that 2018 will be the first of almost full year - the start of ramp of our Certus revenues..

Rick, as to CapEx, our guide is $500 million to $600 million this year. And I would call investors' attention to our 10-Q. We've included our financial obligations table in there, because we know that's top of mind to everybody in terms of how the money gets spent. And so you'll see we’re going to spend a bunch of it here this year and into next year.

I should note that the spend on Thales up till this point has been, I would call it sort of in lockstep with launch delays. The degree to which Thales has completed satellites now, they kind of get unhooked. They kind of done their work and they get payments you’re not withstanding launch delays so investors should know that.

And that's why we've included that additional kind of disclosure in our 10-Q. And it obviously was top of mind as we thought about our liquidity position as we think about 2017 and 2018..

Can you give us a high level, today’s a busy day with four companies all reporting at the same time, do just kind of - can you kind layout with the cutbacks piecing might be?.

So we've said $500 million to $600 million this year in 2017..

Okay.

And then '18, any updated thoughts on what '18 CapEx would be like?.

It’s a remainder, and there's a very small amount that leaks into '19..

[Operator Instructions]. And that concludes our question-and-answer session I would like to turn the conference back to Iridium management for any closing comments..

Well, thanks. Good start to the year. I look forward to seeing some of you, I hope, in California here in June for the launch. And certainly, we'll be following that, and we'll be back and talking to you about the second quarter shortly thereafter. So thanks for joining us..

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. And you may now disconnect. Everyone, have a great day..