Globalstar, Inc. (NYSE American:GSAT) today announced financial and
operating results for the fourth quarter and year ended
December 31, 2017.
Jay Monroe, Chairman and Chief Executive Officer
of Globalstar, commented, "During 2017, our core MSS business
achieved significant financial growth as we successfully executed
on our initiatives. We provided critical connectivity during the
aftermath of several natural disasters, continued to roll out
adjusted rate plans, and announced several partnerships that
expanded the business in innovative ways domestically and abroad.
Also, our SPOT business reached a significant milestone early in
2017 with the 5,000th rescue since its launch, proving how
essential our technology is to saving lives."
Mr. Monroe continued, “This year, we grew our
subscriber base to over 700,000 and significantly improved ARPU
across all revenue streams. This growth drove a 16% increase in
total revenue, while contributing to a reduction in net loss and an
increase in Adjusted EBITDA. While a 57% increase in Adjusted
EBITDA is remarkable growth and not likely to be sustainable as the
revenue base continues to increase, we look forward to expanding
our product portfolio in 2018 with the release of three
feature-rich new devices."
"We also had a monumental year on the regulatory
front, with receipt of our amended domestic spectrum license
mid-year and our first international terrestrial authority during
the fourth quarter. We continue to make progress on our
international plans to globally harmonize our 16.5 MHz of licensed
2.4 GHz spectrum for terrestrial services. We are engaged in
substantive discussions with numerous international regulatory
agencies, including several countries where we have filed
applications. We are pleased with the positive reception to date
and look forward to obtaining additional terrestrial approvals in
the future."
FOURTH QUARTER FINANCIAL
REVIEW
Revenue
Total revenue for the fourth quarter of 2017
increased by $5.0 million, or 21%, from the fourth quarter of 2016.
This increase was driven primarily by higher service revenue
reflecting increased ARPU across our core revenue streams. The
increase in service revenue was offset partially by a decrease in
revenue generated from subscriber equipment sales during the three
months ended December 31, 2017.
Service revenue increased $5.2 million, or 24%,
in the fourth quarter of 2017 compared to the fourth quarter of
2016. This increase was driven primarily by growth in Duplex and
SPOT service revenue, which increased $2.0 million and $2.7
million, respectively. Higher Duplex ARPU, resulting primarily from
rate plan increases, was the main driver of the increase in Duplex
service revenue. The Company adjusted rates for certain legacy
service plans during 2016 to align these rates with current service
plan offerings. The increase in SPOT service revenue was propelled
by growth in ARPU due primarily to rate plan increases and in
average subscribers due to strong activations during 2017. Also
contributing to the increase in service revenue was growth in
Simplex and other service revenue, which were up $0.4 million and
$0.2 million, respectively.
Subscriber equipment sales revenue declined $0.2
million, or 6%, to $2.8 million in the fourth quarter of 2017 from
$3.0 million the fourth quarter of 2016 due to decreases in Duplex
and SPOT sales volume driven by lower availability of phone
inventory, higher service pricing and lower demand as our customers
anticipate the launch of new products. Partially offsetting these
decreases were increases in Simplex and other equipment
revenue.
Loss from Operations
Loss from operations increased $13.5 million, or
80%, to $30.3 million in the fourth quarter of 2017 from $16.8
million in the fourth quarter of 2016. This increase was due to an
$18.5 million increase in operating expenses, offset partially by a
$5.0 million increase in total revenue. The increase in operating
expenses was due primarily to $17.5 million higher asset impairment
charges recorded during the fourth quarter of 2017 driven primarily
by a non-cash reduction in the carrying value of certain assets to
reflect their net realizable or fair value.
Net Loss
Net loss was $22.6 million for the fourth
quarter of 2017 compared to $117.2 million for the fourth quarter
of 2016. This decrease resulted primarily from the change in
non-cash derivative valuation adjustments during the respective
quarters, which contributed $107.9 million to the decrease in net
loss. This fluctuation resulted primarily from changes in certain
valuation inputs, including stock price, stock price volatility,
discount rate and remaining estimated term of the instruments. A
$5.0 million increase in total revenue also decreased the net loss
during 2017, offset primarily by a higher reduction in the value of
assets of $17.5 million for reasons previously discussed.
Adjusted EBITDA
Adjusted EBITDA for the quarters ended
December 31, 2017 and 2016 was $8.7 million and $5.1 million,
respectively. This 70% increase in Adjusted EBITDA was due to
a $5.0 million increase in revenue offset partially by a $1.4
million increase in expenses (excluding EBITDA adjustments). The
increase in expenses during the fourth quarter of 2017 resulted
primarily from higher cost of services, offset partially by lower
cost of subscriber equipment sales as management, general and
administrative costs were flat after adjusting for non-cash stock
compensation. The $1.7 million increase in cost of services was due
primarily to next-generation infrastructure costs, including higher
expenses of $1.0 million associated with the development of new
products and higher maintenance expenses of $0.4 million to support
the second-generation ground network as the Company accepted the
work performed to upgrade its gateways at the end of 2016. The $0.3
million decrease in cost of subscriber equipment sales reflected a
lower volume of Duplex and SPOT units sold during the fourth
quarter of 2017 at a slightly higher blended margin than in the
prior year's fourth quarter.
ANNUAL FINANCIAL REVIEW
Revenue
Total revenue increased $15.8 million, or 16%,
to $112.7 million during 2017. This increase was due to higher
service revenue of $15.4 million resulting primarily from increases
in ARPU across all core revenue streams. Higher Duplex and SPOT
ARPU, which drove over 80% of the increase in total service
revenue, was due to new subscribers joining the network at higher
rates than current ARPU levels, as well as rate plan increases for
legacy subscribers. These rate increases are expected to be rolled
out to the remaining Duplex subscriber base by the end of 2018.
Also driving a net increase in total service revenue was growth in
the Company's total subscriber base during 2017. Average SPOT and
Simplex subscriber base increased 5% and 4%, respectively, driven
by strong activations and lower churn compared to 2016. Offsetting
these increases was a 5% decline in the average Duplex subscriber
base resulting from lower activations as we sold fewer handsets
during 2017 due to decreased inventory levels. The increase in
service revenue was coupled by a $0.4 million increase in revenue
from subscriber equipment sales resulting primarily from a higher
volume of Simplex units sold in connection with hurricane
preparations and aftermath during the summer of 2017.
Loss from Operations
Loss from operations increased $5.1 million, or
8%, during 2017 due to a $20.9 million increase in operating
expenses, offset partially by a $15.8 million increase in total
revenue. As previously discussed, the primary driver of the
increase in operating expenses was due to a $17.5 million higher
reduction in the value of assets recorded during 2017 to adjust the
carrying value of certain inventory and long-lived assets to their
net realizable (or fair) values. Excluding these non-cash
impairment charges, operating expenses increased 2% due primarily
to higher costs associated with next-generation ground support and
product development costs, which each increased $2.0 million.
Net Loss
Net loss was $89.1 million for 2017 compared to
$132.6 million for 2016 due primarily to non-cash items, including
the fluctuation in derivative liabilities and impairment charges
during the respective periods. The Company recorded a derivative
loss of $41.5 million in 2016 compared to a derivative gain of
$21.2 million in 2017. Partially offsetting this variance were
higher impairment charges for inventory and long-lived assets of
$0.8 million and $16.7 million, respectively, based on an
evaluation of the recoverability of these asset values as of
December 31, 2017.
Adjusted EBITDA
Adjusted EBITDA increased 57% to $32.2 million
in 2017 from $20.5 million in 2016. The increase was driven
primarily by a $15.8 million increase in total revenue, offset
partially by a $4.1 million increase in operating expenses
(excluding EBITDA adjustments) for reasons previously
discussed.
CONFERENCE CALL
The Company will conduct an investor conference call on
February 22, 2018 at 5:00 p.m. ET to discuss the 2017 fourth
quarter and annual financial results.
Details are as follows: |
Conference Call: |
5:00
p.m. ETInvestors and the media are encouraged to listen to the call
through the Investor Relations section of the Company's website at
www.globalstar.com/investors. If you would like to
participate in the live question and answer session following the
Company's conference call, please dial 1 (800) 708-4539 (US and
Canada), 1 (847) 619-6396 (International) and use the participant
pass code 46274919. |
Audio Replay: |
A replay of the earnings call will be available for a limited time
and can be heard after 7:30 p.m. ET on February 22, 2018.
Dial: 1 (888) 843-7419 (US and Canada), 1 (630) 652-3042
(International) and pass code 4627 4919#. |
About Globalstar, Inc.
Globalstar is a leading provider of mobile
satellite voice and data services. Customers around the world in
industries such as government, emergency management, marine,
logging, oil & gas and outdoor recreation rely on Globalstar to
conduct business smarter and faster, maintain peace of mind and
access emergency personnel. Globalstar data solutions are ideal for
various asset and personal tracking, data monitoring, SCADA and IoT
applications. The Company's products include mobile and fixed
satellite telephones, the innovative Sat-Fi satellite hotspot,
Simplex and Duplex satellite data modems, tracking devices and
flexible service packages.
Note that all SPOT products described in this
press release are the products of SPOT LLC, a subsidiary of
Globalstar, which is not affiliated in any manner with Spot Image
of Toulouse, France or Spot Image Corporation of Chantilly,
Virginia.
For more information, visit
www.globalstar.com.
Safe Harbor Language for Globalstar ReleasesThis
press release contains certain statements that are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
current expectations and assumptions that are subject to risks and
uncertainties which may cause actual results to differ materially
from the forward-looking statements. Forward-looking statements,
such as the statements regarding our expectations with respect to
the pursuit of terrestrial spectrum authorities globally, future
increases in our revenue and profitability and other statements
contained in this release regarding matters that are not historical
facts, involve predictions. Any forward-looking statements made in
this press release are believed to be accurate as of the date made
and are not guarantees of future performance. Actual results or
developments may differ materially from the expectations expressed
or implied in the forward-looking statements, and we undertake no
obligation to update any such statements. Additional information on
factors that could influence our financial results is included in
our filings with the Securities and Exchange Commission, including
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
GLOBALSTAR, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue: |
|
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
26,622 |
|
|
$ |
21,398 |
|
|
$ |
98,473 |
|
|
$ |
83,069 |
|
|
Subscriber
equipment sales |
|
2,805 |
|
|
2,997 |
|
|
14,187 |
|
|
13,792 |
|
|
|
Total revenue |
|
29,427 |
|
|
24,395 |
|
|
112,660 |
|
|
96,861 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
services (exclusive of depreciation, amortization and accretion
shown separately below) |
|
9,697 |
|
|
8,007 |
|
|
37,022 |
|
|
31,908 |
|
|
Cost of
subscriber equipment sales |
|
2,165 |
|
|
2,432 |
|
|
9,944 |
|
|
9,907 |
|
|
Cost of
subscriber equipment sales - reduction in the value of
inventory |
|
843 |
|
|
— |
|
|
843 |
|
|
— |
|
|
Marketing,
general and administrative |
|
10,449 |
|
|
10,845 |
|
|
39,099 |
|
|
40,982 |
|
|
Reduction
in the value of long-lived assets |
|
17,040 |
|
|
350 |
|
|
17,040 |
|
|
350 |
|
|
Depreciation, amortization and accretion |
|
19,514 |
|
|
19,565 |
|
|
77,498 |
|
|
77,390 |
|
|
|
Total operating
expenses |
|
59,708 |
|
|
41,199 |
|
|
181,446 |
|
|
160,537 |
|
Loss from
operations |
|
(30,281 |
) |
|
(16,804 |
) |
|
(68,786 |
) |
|
(63,676 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt |
|
— |
|
|
— |
|
|
(6,306 |
) |
|
— |
|
|
Gain on
equity issuance |
|
— |
|
|
51 |
|
|
2,670 |
|
|
2,400 |
|
|
Interest
income and expense, net of amounts capitalized |
|
(8,139 |
) |
|
(8,932 |
) |
|
(34,771 |
) |
|
(35,952 |
) |
|
Derivative
gain (loss) |
|
16,249 |
|
|
(91,668 |
) |
|
21,182 |
|
|
(41,531 |
) |
|
Other |
|
(433 |
) |
|
151 |
|
|
(2,873 |
) |
|
(430 |
) |
|
|
Total other income
(expense) |
|
7,677 |
|
|
(100,398 |
) |
|
(20,098 |
) |
|
(75,513 |
) |
Loss before
income taxes |
|
(22,604 |
) |
|
(117,202 |
) |
|
(88,884 |
) |
|
(139,189 |
) |
Income tax
expense (benefit) |
|
(19 |
) |
|
19 |
|
|
190 |
|
|
(6,543 |
) |
Net
loss |
|
$ |
(22,585 |
) |
|
$ |
(117,221 |
) |
|
$ |
(89,074 |
) |
|
$ |
(132,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per
common share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.12 |
) |
|
Diluted |
|
(0.02 |
) |
|
(0.11 |
) |
|
(0.08 |
) |
|
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
1,251,826 |
|
|
1,086,631 |
|
|
1,166,581 |
|
|
1,064,443 |
|
|
Diluted |
|
1,251,826 |
|
|
1,086,631 |
|
|
1,166,581 |
|
|
1,064,443 |
|
GLOBALSTAR, INC. |
RECONCILIATION OF GAAP NET INCOME (LOSS) TO
NON-GAAP ADJUSTED EBITDA |
(In thousands) |
(unaudited) |
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net
loss |
|
$ |
(22,585 |
) |
|
$ |
(117,221 |
) |
|
$ |
(89,074 |
) |
|
$ |
(132,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
Interest income and
expense, net |
|
8,139 |
|
|
8,932 |
|
|
34,771 |
|
|
35,952 |
|
|
Derivative (gain)
loss |
|
(16,249 |
) |
|
91,668 |
|
|
(21,182 |
) |
|
41,531 |
|
|
Income tax expense
(benefit) |
|
(19 |
) |
|
19 |
|
|
190 |
|
|
(6,543 |
) |
|
Depreciation,
amortization, and accretion |
|
19,514 |
|
|
19,565 |
|
|
77,498 |
|
|
77,390 |
|
EBITDA |
|
(11,200 |
) |
|
2,963 |
|
|
2,203 |
|
|
15,684 |
|
|
|
|
|
|
|
|
|
|
|
|
Reduction in the value
of inventory |
|
843 |
|
|
— |
|
|
843 |
|
|
— |
|
|
Reduction in the value
of long-lived assets |
|
17,040 |
|
|
350 |
|
|
17,040 |
|
|
350 |
|
|
Non-cash
compensation |
|
1,622 |
|
|
2,022 |
|
|
5,594 |
|
|
5,364 |
|
|
Foreign exchange and
other |
|
433 |
|
|
(151 |
) |
|
2,873 |
|
|
430 |
|
|
Loss on extinguishment
of debt |
|
— |
|
|
— |
|
|
6,306 |
|
|
— |
|
|
Gain on equity
issuance |
|
— |
|
|
(51 |
) |
|
(2,670 |
) |
|
(2,400 |
) |
|
Legal settlement paid
in stock |
|
— |
|
|
— |
|
|
— |
|
|
1,094 |
|
Adjusted
EBITDA (1) |
|
$ |
8,738 |
|
|
$ |
5,133 |
|
|
$ |
32,189 |
|
|
$ |
20,522 |
|
(1 |
) |
|
EBITDA represents earnings before interest, income taxes,
depreciation, amortization, accretion and derivative
(gains)/losses. Adjusted EBITDA excludes non-cash compensation
expense, reduction in the value of assets, foreign exchange
(gains)/losses, and certain other non-recurring charges as
applicable. Management uses Adjusted EBITDA in order to manage the
Company's business and to compare its results more closely to the
results of its peers. EBITDA and Adjusted EBITDA do not represent
and should not be considered as alternatives to GAAP measurements,
such as net income/(loss). These terms, as defined by us, may not
be comparable to similarly titled measures used by other companies.
The Company uses Adjusted EBITDA as a supplemental measurement of
its operating performance. The Company believes it best reflects
changes across time in the Company's performance, including the
effects of pricing, cost control and other operational
decisions. The Company's management uses Adjusted EBITDA for
planning purposes, including the preparation of its annual
operating budget. The Company believes that Adjusted EBITDA
also is useful to investors because it is frequently used by
securities analysts, investors and other interested parties in
their evaluation of companies in similar industries. As indicated,
Adjusted EBITDA does not include interest expense on borrowed money
or depreciation expense on our capital assets or the payment of
income taxes, which are necessary elements of the Company's
operations. Because Adjusted EBITDA does not account for these
expenses, its utility as a measure of the Company's operating
performance has material limitations. Because of these
limitations, the Company's management does not view Adjusted EBITDA
in isolation and also uses other measurements, such as revenues and
operating profit, to measure operating performance. |
GLOBALSTAR, INC. |
SCHEDULE OF SELECTED OPERATING
METRICS |
(In thousands, except subscriber and ARPU data) |
(unaudited) |
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
Service |
Equipment |
|
Service |
Equipment |
|
Service |
Equipment |
|
Service |
Equipment |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Duplex |
|
$ |
10,139 |
|
$ |
466 |
|
|
$ |
8,118 |
|
$ |
733 |
|
|
$ |
37,635 |
|
$ |
2,754 |
|
|
$ |
31,848 |
|
$ |
3,877 |
|
|
SPOT |
|
12,589 |
|
933 |
|
|
9,905 |
|
1,270 |
|
|
45,427 |
|
5,394 |
|
|
38,157 |
|
5,321 |
|
|
Simplex |
|
3,101 |
|
1,072 |
|
|
2,702 |
|
928 |
|
|
10,946 |
|
5,243 |
|
|
10,005 |
|
3,765 |
|
|
IGO |
|
221 |
|
256 |
|
|
253 |
|
137 |
|
|
1,068 |
|
779 |
|
|
907 |
|
843 |
|
|
Other |
|
572 |
|
78 |
|
|
420 |
|
(71 |
) |
|
3,397 |
|
17 |
|
|
2,152 |
|
(14 |
) |
|
|
|
$ |
26,622 |
|
$ |
2,805 |
|
|
$ |
21,398 |
|
$ |
2,997 |
|
|
$ |
98,473 |
|
$ |
14,187 |
|
|
$ |
83,069 |
|
$ |
13,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Subscribers |
|
|
|
|
|
|
|
|
|
|
|
Duplex |
|
71,261 |
|
|
|
76,256 |
|
|
|
72,443 |
|
|
|
75,925 |
|
|
|
SPOT |
|
292,798 |
|
|
|
277,317 |
|
|
|
285,683 |
|
|
|
272,006 |
|
|
|
Simplex |
|
326,720 |
|
|
|
297,712 |
|
|
|
313,553 |
|
|
|
300,055 |
|
|
|
IGO |
|
36,463 |
|
|
|
38,809 |
|
|
|
37,165 |
|
|
|
38,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Duplex |
|
$ |
47.43 |
|
|
|
$ |
35.49 |
|
|
|
$ |
43.29 |
|
|
|
$ |
34.96 |
|
|
|
SPOT |
|
14.33 |
|
|
|
11.91 |
|
|
|
13.25 |
|
|
|
11.69 |
|
|
|
Simplex |
|
3.16 |
|
|
|
3.03 |
|
|
|
2.91 |
|
|
|
2.78 |
|
|
|
IGO |
|
2.02 |
|
|
|
2.17 |
|
|
|
2.39 |
|
|
|
1.96 |
|
|
(1 |
) |
|
Average monthly revenue per user (ARPU) measures service revenues
per month divided by the average number of subscribers during that
month. Average monthly revenue per user as so defined may not be
similar to average monthly revenue per unit as defined by other
companies in the Company's industry, is not a measurement under
GAAP and should be considered in addition to, but not as a
substitute for, the information contained in the Company's
statement of operations. The Company believes that average monthly
revenue per user provides useful information concerning the appeal
of its rate plans and service offerings and its performance in
attracting and retaining high value customers. |
Investor contact information:Kyle
Pickenskyle.pickens@globalstar.com
Globalstar (AMEX:GSAT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Globalstar (AMEX:GSAT)
Historical Stock Chart
From Jul 2023 to Jul 2024