Globalstar, Inc. (NYSE American: GSAT) today announced its
operating and financial results for the quarter ended September 30,
2021.
Dave Kagan, Chief Executive Officer of Globalstar, commented,
“We are pleased with the continued positive momentum in SPOT and
Commercial IoT as the associated service and equipment revenue are
each up from the third quarter 2020. The significant increase in
equipment sales following the COVID-related headwinds that impacted
demand in 2020 is a clear indicator of a rebound in these areas of
the business. SPOT activations continued at record levels with LTM
gross activations up 17% from the prior period, while Commercial
IoT activations have continued to increase since the fourth quarter
of 2020 and churn was 11% lower over the last twelve months
compared to the prior year period. We have also expanded our
partner network across both service lines as we pursued
opportunities in new Commercial IoT verticals and initiated
distribution across new SPOT retailers. We expect this momentum to
continue as we look into next year, and are especially excited
about our developmental progress of the two-way IoT module, with
capabilities that include both tracking as well as command control.
Combined with a recently revamped partner engagement strategy for
Commercial IoT, we anticipate a sea change when new two-way product
availability is combined with an enhanced sales model for our
reseller partners as we begin to compete in a large, established
two-way market."
Kagan continued, "As we grow our SPOT partner ecosystem and
subscriber base, we are broadening the scope of users who rely on
our life-saving technology. I would like to share one real-life
SPOT save this quarter which highlights the critical nature of our
services – a single example that may not have made national
headlines but, like so many other saves, touched the hearts of our
employees and the SPOT subscriber family. Last month, a customer
reached out to us directly to thank us for the life-saving
technology that we have embedded in our SPOT personal communication
devices and shared his story. After being injured and stranded on a
remote trail, without the accuracy of our GPS technology and speed
of our emergency response services, this customer would have
remained stranded in Lake Pleasant Regional Park. Despite his
injuries on a trail where it could be days before others would
typically approach him, he was able to press the SOS button and
emergency personnel were able to pinpoint his location and quickly
descend on his location, bringing critical care in his time of
need. While just one example on a micro scale, we believe that this
customer, one of the over 8,000 rescues made, represents why
satellite connectivity is so critical and will become ever more so
over time on a macro scale. We are proud of what we contribute as a
company and never underestimate the importance of our role as a
satellite service provider."
Kagan concluded, "Finally, I am thrilled to report that we have
less than $10 million of net first lien principal outstanding and
expect to pay this remaining balance in full in the coming days. We
would like to thank our French banking partners as well as BPIFAE
on our 12-year partnership."
Jay Monroe, Executive Chairman of Globalstar, commented, “While
real world anecdotes like the one Dave mentioned above truly
inspire us in our daily work, we are equally encouraged by the
progress we are making on the terrestrial spectrum effort. We
recently attended a large mobile conference in Los Angeles and the
progress we have made was very evident as many chipset vendors,
infrastructure providers and module makers were all aware of and
interested in supporting Band 53."
Monroe continued, "We are also encouraged by the multitude of
use cases our ecosystem is finding for this band. After this
long-term investment and thorough cultivation of this asset, we
continue to see our licensed spectrum resource in Band 53 becoming
an increasingly valuable asset for parties that want to reduce
their reliance on the carriers with private wireless but also as an
incremental band for more traditional wireless providers. We
continue to make great progress developing the ecosystem and have
expanded licensed POPs across three continents, giving us the tools
to capitalize on this substantial and growing opportunity.
"Our regulatory efforts are picking up momentum and we look
forward to having more to share in the coming months."
FINANCIAL REVIEW
Revenue
Total Revenue
Total revenue for the third quarter of 2021 decreased slightly
from the third quarter of 2020 primarily from timing of engineering
services revenue. Lower service revenue was offset by an increase
in revenue generated from subscriber equipment sales.
Service Revenue
We are pleased to see SPOT service revenue increasing 4% quarter
over quarter, driven by higher average subscribers. As we have
discussed over the past few quarters, we continue to see a recovery
in SPOT driven by a higher volume of both equipment sales and
subscriber activations. SPOT activations have increased each
consecutive quarter this year and are up 17% over the last twelve
months. As of September 30, 2021, our SPOT subscriber base,
totaling approximately 275,000, has exceeded pre-COVID levels.
Duplex service revenue decreased over the prior year's quarter
due primarily to fewer subscribers. Given the shift in demand
across the industry from Duplex voice and data services to
IoT-enabled devices, we continue to focus our resources on other
growing revenue streams. While we expect the decline in our Duplex
subscriber base to continue, the number of net deactivations are
expected to continue to slow relative to prior periods.
Service revenue generated from Commercial IoT subscribers
increased slightly in the third quarter of 2021 driven primarily by
higher ARPU compared to the prior year's quarter. Consistent with
the trend in recent quarters, the increase in ARPU was due to
higher usage and the mix of our subscribers on higher rate plans
compared to the prior year period. Despite the slight decrease in
average subscribers, gross activations have also continued to
increase in 2021 and churn was 11% lower over the last twelve
months compared to the prior year period. Importantly, Commercial
IoT equipment sales increased approximately 50% compared to both
prior year periods (discussed further below) which we believe is
another positive indication for future Commercial IoT service
revenue growth.
Finally, revenue recognized from engineering services decreased
over the year's quarter resulting from the timing and amount of
milestones completed associated with a specific contract. As
engineering services revenue is generally milestone-based, we
continue to see relatively sporadic recognition of this revenue
stream, as expected.
Subscriber Equipment Sales
Subscriber equipment sales increased $0.4 million in the third
quarter of 2021 compared to the third quarter of 2020. The majority
of the revenue increase was driven by a higher volume of Commercial
IoT sales. Revenue generated from Commercial IoT sales benefited
from increases in volume for almost all device types.
Revenue from SPOT equipment sales was generally flat, but up
when comparing the year to date period. We experienced a temporary
sales back order position at the end of the third quarter due to
inventory shortages, which delayed the fulfillment of certain
orders into the fourth quarter of 2021. We have generally been
successful in managing supply chain disruptions caused by component
part shortages; however, demand exceeded supply during the third
quarter of 2021.
To help mitigate these challenges, which also impact Commercial
IoT equipment, we are ordering available material in higher volumes
and at higher costs than historically done. To date, our sales
margin has not been significantly impacted when compared to the
prior period due to the offsetting impact of a reduction in labor
rates with our primary manufacturer negotiated in the third quarter
of 2020.
Loss from Operations
Loss from operations was $14.7 million during the third quarter
of 2021 compared to $14.6 million during the third quarter of 2020.
The slight increase in operating loss was due to a decline in total
revenue offset by a decrease in operating expenses.
Lower marketing, general and administrative (MG&A) and
depreciation expense were offset by an increase in cost of
services. MG&A was favorably impacted by lower subscriber
acquisition costs and stock-based compensation. Cost of services
increased quarter over quarter resulting from higher lease expense
resulting from our gateway expansion efforts as well as higher
licensing and professional fees to support our anticipated launch
of a new ERP system in early 2022.
Net Loss
Net loss increased $5.9 million from the third quarter of 2020
to the third quarter of 2021. This change was due primarily to
fluctuations in foreign currency and derivative gains and losses.
Also contributing to the increase in net loss was a loss on
extinguishment of debt, which resulted from a principal prepayment
on our First Lien Facility Agreement during the third quarter of
2021.
Adjusted EBITDA
Adjusted EBITDA was $10.6 million during the third quarter of
2021, down from $11.5 million for the prior year's quarter, due to
a slight decrease in revenue and higher operating expenses
(excluding EBITDA adjustments) for the reasons previously
discussed.
Liquidity
As of September 30, 2021, we held cash and cash equivalents of
$11.3 million and restricted cash of $51.1 million. As previously
announced, we received an advance payment of $37.5 million during
the third quarter of 2021. We used these proceeds to pay a portion
of the remaining amount due under the First Lien Facility
Agreement. Net of the $51.1 million held in a restricted cash
account, the remaining principal balance under the First Lien
Facility Agreement is $9.3 million and matures in December 2022. We
expect to pay off this remaining balance using cash on hand and a
partial reimbursement of premia paid under the Facility
Agreement.
Our sources of cash also include operating cash flows generated
from the business. We expect our uses of cash over the next twelve
months to include operating costs and capital expenditures related
primarily to network upgrades.
About Globalstar, Inc.
Globalstar is a leading provider of customizable Satellite IoT
Solutions for customers around the world in industries such as oil
and gas, transportation, emergency management, government, maritime
and outdoor recreation. A pioneer of mobile satellite voice and
data services, Globalstar solutions connect people to their devices
and allow businesses to streamline operations providing safety and
communication and enabling mobile assets to be monitored remotely
via the Globalstar Satellite Network. The Company's Commercial IoT
product portfolio includes industry-acclaimed SmartOne asset
tracking products, Commercial IoT satellite transmitters and the
SPOT® product line for personal safety, messaging and emergency
response, all supported on SPOT My Globalstar, a robust cloud-based
enhanced mapping solution. Learn more at Globalstar.com.
Note that all SPOT products described in this press release are
the products of SPOT LLC, which is not affiliated in any manner
with Spot Image of Toulouse, France or Spot Image Corporation of
Chantilly, Virginia.
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, the impact on our business due to unexpected events
such as the COVID-19 coronavirus, 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
September 30,
2021
2020
Revenue:
Service revenue
$
27,848
$
28,385
Subscriber equipment sales
4,766
4,372
Total revenue
32,614
32,757
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
9,648
8,580
Cost of subscriber equipment sales
4,099
4,032
Cost of subscriber equipment sales -
reduction in the value of inventory
71
—
Marketing, general and administrative
9,196
10,063
Reduction in the value of long-lived
assets
242
—
Depreciation, amortization, and
accretion
24,072
24,717
Total operating expenses
47,328
47,392
Loss from operations
(14,714
)
(14,635
)
Other (expense) income:
Loss on extinguishment of debt
(829
)
—
Interest income and expense, net of
amounts capitalized
(11,406
)
(11,398
)
Derivative gain
229
1,225
Foreign currency (loss) gain
(4,752
)
266
Other
473
(346
)
Total other (expense) income
(16,285
)
(10,253
)
Loss before income taxes
(30,999
)
(24,888
)
Income tax (benefit) expense
(114
)
58
Net loss
$
(30,885
)
$
(24,946
)
Net loss per common share:
Basic
$
(0.02
)
$
(0.01
)
Diluted
(0.02
)
(0.01
)
Weighted-average shares outstanding:
Basic
1,793,144
1,670,315
Diluted
1,793,144
1,670,315
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2021
2020
Net loss
$
(30,885
)
$
(24,946
)
Interest income and expense, net
11,406
11,398
Derivative gain
(229
)
(1,225
)
Income tax (benefit) expense
(114
)
58
Depreciation, amortization, and
accretion
24,072
24,717
EBITDA
4,250
10,002
Non-cash compensation
905
1,449
Reduction in the value of inventory and
long-lived assets
313
—
Foreign exchange and other
4,279
81
Loss on extinguishment of debt
829
—
Adjusted EBITDA (1)
$
10,576
$
11,532
(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 and
inventory, 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 revenue 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
September 30,
2021
2020
Service
Equipment
Service
Equipment
Revenue
Duplex
$
9,632
$
265
$
9,956
$
510
SPOT
11,873
2,619
11,396
2,602
Commercial IoT
4,458
1,841
4,420
1,256
Engineering and other
1,885
41
2,613
4
Total revenue
$
27,848
$
4,766
$
28,385
$
4,372
Average subscribers
Duplex
45,004
49,533
SPOT
271,843
260,153
Commercial IoT
410,630
414,049
Other
26,848
27,361
Total average subscribers
754,325
751,096
ARPU (1)
Duplex
$
71.34
$
67.00
SPOT
14.56
14.60
Commercial IoT
3.62
3.56
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104006141/en/
Investor Contact Information: Denise Davila
investorrelations@globalstar.com
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