Globalstar, Inc. (NYSE American: GSAT) today announced its
financial results for the quarter ended June 30, 2018.
Jay Monroe, Chairman and Chief Executive Officer of Globalstar,
commented, “As disclosed yesterday, Globalstar, following the
unanimous recommendation of its Special Committee of independent
directors, and Thermo terminated the proposed merger agreement by
mutual written agreement. While I believe that this merger would
have positioned Globalstar more strongly for the future, this
transaction is no longer the path forward. Instead, we will
continue to run the satellite business on a standalone basis. While
we remain focused on Globalstar's satellite business and spectrum,
if the opportunity to strengthen the Company and enhance
shareholder value through a strategic transaction arises, we will
consider it."
Mr. Monroe continued, "We continue to improve the financial and
operating results of our satellite business, while pursuing various
international regulatory and 3GPP approvals. During the second
quarter, Globalstar increased total revenue by 20% with increases
in both service revenue and subscriber equipment sales in core
product categories. While ARPU has been climbing consistently for
several quarters, we also increased subscriber equipment sales this
quarter with the recent launch of three new products. We have
experienced positive market reception to these products, with the
strongest response coming from our SmartOne SolarTM IoT device. The
success of this solar-powered asset tracking product resulted in
significant back-orders at the end of the quarter, while still
contributing to the narrowing of our net loss and a 37% increase in
Adjusted EBITDA over the prior year's second quarter."
SECOND QUARTER FINANCIAL REVIEW
Revenue
Total revenue for the second quarter of 2018 increased by $5.6
million, or 20%, from the second quarter of 2017. This increase
resulted primarily from higher service revenue and subscriber
equipment sales across all core revenue streams.
Service revenue increased $3.7 million, or 15%, in the second
quarter of 2018 compared to the second quarter of 2017. The
majority of this increase resulted from higher SPOT service
revenue, which grew $2.7 million due to increases in ARPU and
average subscribers. ARPU, which increased 19% following rate plan
changes, was the main component of this growth, contributing $2.2
million to the service revenue increase. A 4% increase in the
average SPOT subscriber base, resulting from growth in both legacy
and new product customers, also positively impacted service revenue
when compared to the second quarter of 2017. Higher Duplex and
Simplex service revenue of $0.8 million and $0.7 million,
respectively, further contributed to the total service revenue
increase.
Subscriber equipment sales revenue increased $1.9 million, or
50%, following the introduction of new products during 2018,
including the successful launch of a new commercial IoT Simplex
product that alone contributed $2.0 million to equipment revenue
during the second quarter. As anticipated, sales of certain legacy
products, particularly in the Duplex and SPOT channels, declined
during the quarter following the launch of next-generation devices
largely offsetting the revenue generated from these product
introductions. The Company is working through certain product
availability and mass production issues that will need to be solved
before Duplex and SPOT equipment revenue grows in proportion to the
demand the Company is experiencing for these products.
Operating Income (Loss)
Operating income (loss) improved $14.4 million from a loss of
$12.4 million in the second quarter of 2017 to income of $2.0
million in the second quarter of 2018. This change was due
primarily to a $5.6 million increase in total revenue (for reasons
previously discussed) and a $8.8 million decrease in operating
expenses. A decrease in expense of $20.5 million was recorded
during the quarter relating to a previously recorded contract
termination charge. Partially offsetting this decrease was a $6.5
million increase in marketing, general and administrative
(MG&A) expenses primarily from higher costs to support the
proposed merger with Thermo Acquisitions, Inc. that was announced
in April 2018 and terminated in July 2018. A $3.3 million increase
in depreciation, amortization and accretion expense also
contributed to the increase in operating expenses as a portion of
the costs from our upgraded ground infrastructure was placed into
service during the second quarter commensurate with the launch of
our Sat-Fi2TM device. Cost of services and cost of subscriber
equipment sales were also up from the second quarter of 2017 by
$0.5 million and $1.4 million, respectively.
Net Loss
Net loss decreased $91.7 million during the second quarter of
2018 due primarily to a lower non-cash derivative loss of $75.0
million. Changes in the Company's stock price and volatility
assumptions were the primary factors of the derivative adjustments
recorded during the respective quarters. Also contributing to the
decrease in net loss was an accrual for the settlement of a
business economic loss claim reached during the second quarter of
2018 and expected to be paid in equal installments in January 2019
and 2020.
Adjusted EBITDA
Adjusted EBITDA increased 37% to $11.2 million during the second
quarter of 2018 primarily from a $5.6 million increase in total
revenue, offset partially by a $2.6 million increase in total
operating expenses (excluding EBITDA adjustments). Driving this
improvement was an increase in service revenue and equipment
margin, offset partially by an increase in cost of services and
MG&A expenses due to higher network and subscriber acquisition
costs.
CONFERENCE CALL
The Company will conduct an investor conference call on
August 2, 2018 at 5:00 p.m. ET to discuss its second quarter
2018 financial results.
Details are as follows: Conference Call:
5:00 p.m. ET
Investors and the media are encouraged to
listen to the call through the Investor Relations section of the
Company's website at www.globalstar.com/corporate. If you would
like to participate in the live question and answer session
following the Company's conference call, please dial 1 (800)
708-4540 (US and Canada), 1 (847) 619-6397 (International) and use
the participant pass code 47222669.
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 August 2, 2018. Dial: 1 (888) 843-7419 (US and
Canada), 1 (630) 652-3042 (International) and pass code 4722 2669#.
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 Releases
This 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.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per
share data)(Unaudited)
Three Months Ended
June 30, 2018 2017 Revenue:
Service revenue $ 27,995 $ 24,301 Subscriber equipment sales 5,731
3,822 Total revenue 33,726 28,123
Operating expenses: Cost of services (exclusive of depreciation,
amortization, and accretion shown separately below) 9,526 9,036
Cost of subscriber equipment sales 4,170 2,778 Marketing, general
and administrative 15,944 9,473 Revision to contract termination
charge (20,478 ) — Depreciation, amortization, and accretion 22,616
19,275 Total operating expenses 31,778 40,562
Operating income (loss) 1,948 (12,439 ) Other income
(expense): Gain on equity issuance — 1,964 Interest income and
expense, net of amounts capitalized (10,305 ) (8,850 ) Derivative
loss (2,059 ) (77,130 ) Gain on legal settlement 6,779 — Other
(3,351 ) (2,173 ) Total other income (expense) (8,936 ) (86,189 )
Loss before income taxes (6,988 ) (98,628 ) Income tax expense 24
106 Net loss $ (7,012 ) $ (98,734 ) Net loss
per common share: Basic $ (0.01 ) $ (0.09 ) Diluted (0.01 ) (0.09 )
Weighted-average shares outstanding: Basic 1,263,372 1,128,985
Diluted 1,263,372 1,128,985
GLOBALSTAR, INC.RECONCILIATION
OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA(In
thousands)(Unaudited)
Three Months Ended
June 30, 2018 2017 Net loss $
(7,012 ) $ (98,734 ) Interest income and expense, net 10,305
8,850 Derivative loss 2,059 77,130 Income tax expense 24 106
Depreciation, amortization, and accretion 22,616 19,275
EBITDA 27,992 6,627 Non-cash compensation 1,749 1,426
Foreign exchange and other 3,290 1,864 Debt modification third
party fees — 238 Gain on equity issuance — (1,964 ) Merger-related
costs 5,427 Revision to contract termination charge (20,478 ) —
Gain on legal settlement (6,779 ) — Adjusted EBITDA (1) $
11,201 $ 8,191 (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. In connection with the adoption of ASU No.
2014-09, Revenue from Contracts with Customers, the Company has not
recast Adjusted EBITDA in prior periods.
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
June 30, 2018 2017
Service Equipment Service
Equipment Revenue Duplex $ 10,134 $ 750 $ 9,322 $ 612
SPOT 13,868 1,908 11,193 1,815 Simplex 3,216 2,846 2,526 1,072 IGO
216 136 376 330 Other 561 91 884 (7 ) $ 27,995 $ 5,731 $ 24,301 $
3,822 Average Subscribers Duplex 67,456 72,290 SPOT
293,659 282,826 Simplex 345,749 300,459 IGO 25,988 37,162
ARPU (1) Duplex $ 50.08 $ 42.98 SPOT 15.74 13.19 Simplex 3.10 2.80
IGO 2.77 3.37 (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.
In connection with the adoption of ASU No. 2014-09, Revenue from
Contracts with Customers, the Company has not recast revenue or
ARPU in prior periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180802005925/en/
Globalstar, Inc.Samantha
DeCastroinvestorrelations@globalstar.com
Globalstar (AMEX:GSAT)
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