Globalstar, Inc. (NYSE American: GSAT) today announced its
operating and financial results for the quarter ended March 31,
2022.
Dave Kagan, Chief Executive Officer of Globalstar, commented,
“The first few months of 2022 have been very active. As previously
announced, we entered into a satellite procurement agreement with
Macdonald, Dettwiler and Associates Corporation in February. These
new satellites will ensure continuity of service to all of our
existing and future subscribers as well as other users of the
network. We also plan to launch our on-ground spare satellite in
the coming months that will serve the same purpose. With the vast
majority of these capital expenditures reimbursable under the Terms
Agreement, the Company is in a strong position to significantly
increase cash flow with minimal sustaining capex.
We also made meaningful progress towards building our Commercial
IoT ecosystem. We have multiple projects underway that will
ultimately deliver more robust products that offer a best-in-class
enablement suite and operate on upgraded gateway base stations.
These deliverables provide the fundamentals that will allow us to
effectively pursue sales opportunities with carriers, enterprises
and large resellers. While we expect to expand materially with
these new offerings, in the meantime, we have continued to grow our
Commercial IoT revenue with existing products and functionality.
Despite the headwinds caused by component part shortages,
Commercial IoT revenue increased 8% from the prior year's first
quarter. We have several thousand units on back-order of our most
popular and profitable Commercial IoT products and expect to resume
production during the second quarter to fill these orders and get
back to a healthy inventory level which helps protect against the
risk of future supply chain disruptions.
Our other types of revenue rounded out nicely during the first
quarter with SPOT subscribers continuing to increase on a YOY basis
and engineering services generating significant revenue."
Jay Monroe, Executive Chairman, commented, “As we have said many
times in the past, Globalstar has a unique collection of assets in
its LEO satellite constellation, global ground station network and
terrestrial spectrum. Our strategy to drive value from the assets
can be subdivided into our four pillars of value: legacy Duplex and
SPOT services, wholesale satellite capacity, Commercial IoT and
terrestrial spectrum. We generally look to our legacy services as
cash flow generators where we will wisely manage these areas to
reduce expenses while prolonging their revenue. The other three
pillars represent significant growth opportunities for Globalstar
and are all closer to value realization than ever before, and we
are more confident in the outcome than ever.
Our wholesale satellite capacity pillar with the potential
customer continues to be a major focus for the Company. It should
be clear to the market that we will continue to invest in and
expand our satellite business for many decades and are motivated to
put all of our satellite resources to use.
The Commercial IoT effort has been accelerated by building out
the team who we expect to drive growth while building the
foundation to take advantage of our new products and platform. The
team’s strong relationships are already opening doors and keeping
them open through partnerships and sales efforts. We are ready to
offer customers high quality one-way services at a price point that
makes their decisions easy. We are also involved with many
potential customers designing two-way services for specific
applications. Lastly, we are working with our module vendor partner
to create solutions that work over both satellite and cellular,
including Band 53, further expanding the use cases for IoT.
Terrestrial spectrum opportunities continue to mature. We have
signed a term sheet with a large, global customer to begin
deploying Band 53 in the US and beyond. This is a significant
opportunity that will take time but signs point towards success; we
will share more information when we are allowed. We are also active
in several international opportunities in the mining,
transportation and logistics sectors, any of which would be
meaningful if concluded.
The terrestrial ecosystem also continues to develop with new
radio vendors and end user products making it even easier for us to
offer solutions to customers. Finally, we continue to pursue MSS
and terrestrial regulatory approvals around the world to further
add to the Company's potential."
FINANCIAL REVIEW
Revenue
Total Revenue
Total revenue for the first quarter of 2022 increased $5.8
million, or 22%, from the first quarter of 2021 primarily due to an
increase in service revenue from engineering services. Higher
service revenue was offset slightly by a decrease in revenue
generated from subscriber equipment sales.
Service Revenue
Higher service revenue of $6.3 million was due primarily to the
timing and amount of engineering and other service revenue
associated with the Terms Agreement, which increased $6.4 million
from the first quarter of 2021. During the first quarter of 2022,
we recognized $6.8 million for consideration received for
performance obligations associated with our work to expand and
upgrade our gateways around the world and under the satellite
procurement agreement.
Subscriber driven revenue was generally flat from the prior
year's first quarter.
The decrease in Duplex service revenue was expected as we
continue to see attrition in our subscriber base. Given the shift
in demand across the industry from full voice and data services to
IoT-enabled devices, we have decided to no longer support Duplex
hardware sales given excess costs and the amount of capacity
consumed by Duplex service.
SPOT service revenue increased, which was driven by higher
average subscribers offset partially by lower ARPU. We continue to
see gross subscriber activations increasing, including an 18%
increase in activations when comparing the first quarter 2022 to
first quarter 2021. Lower ARPU was driven by the mix of subscribers
on various rate plans, including the continued popularity of our
flex plans, which allow subscribers to suspend their service when
not in use. We expect seasonality to cause fluctuations in SPOT
ARPU given this service plan offering.
Commercial IoT service revenue increased driven by higher
average subscribers. Gross subscriber activations increased nearly
20% over the last twelve months from the prior LTM period due to
higher equipment sales and re-activations of existing devices.
Subscriber Equipment Sales
Subscriber equipment sales decreased $0.4 million in the first
quarter of 2022 compared to the first quarter of 2021. The majority
of the revenue decrease was driven by a lower volume of Duplex
phones and accessories for the reasons previously discussed as well
as a lower volume of SPOT devices due to component part shortages.
A higher volume of Commercial IoT sales partially offset some of
this decrease.
SPOT equipment sales revenue was down 23% resulting from a lower
sales volume since two of our core SPOT products are on back order
due to inventory shortages, which delayed the fulfillment of
certain orders during the first quarter of 2022. We continue to see
demand exceeding supply resulting from supply chain disruptions
caused by component part shortages. We are actively working to
address this issue but expect this trend to continue through at
least the second quarter of 2022.
Commercial IoT equipment sales revenue increased 19% despite
inventory shortages. Volume was higher for all of our IoT devices,
primarily driven by our SmartOne devices and modules. Sales were
higher than the prior quarter despite the same component part
shortage issues discussed above in SPOT, which resulted in sales
orders exceeding available inventory supply during the first
quarter of 2022. Many of our IoT devices were on back order at
March 31, 2022. We are actively working to address this issue and
expect to resume production of our SmartOne products in the coming
weeks.
Loss from Operations
Loss from operations was $13.7 million during the first quarter
of 2022 compared to $19.3 million during the first quarter of 2021.
This improvement was due to an increase in revenue (discussed
above) as operating expenses were generally flat. Higher cost of
services were offset by lower marketing, general and administrative
(MG&A), depreciation expense and cost of subscriber equipment
sales.
Cost of services and MG&A were elevated partially due to
nonrecurring personnel costs of $0.9 million and $1.1 million,
respectively, which were driven by cash bonuses and separation pay.
Cost of services was also higher due to an increase in lease
expense for our gateway expansion efforts associated with the Terms
Agreement and higher licensing and professional fees to support the
launch of a new ERP system in January 2022. MG&A expense was
lower (excluding nonrecurring personnel costs discussed above) due
to the release of a $1.0 million accrual for professional services
that we believe is no longer owed as well as lower customer
appeasement costs.
Net Loss
Net loss improved by $15.9 million from the first quarter of
2021 to the first quarter of 2022. In addition to the increase in
revenue previously discussed, net loss decreased due primarily to
lower interest expense as well as favorable changes in foreign
currency and derivative losses.
Adjusted EBITDA
Adjusted EBITDA was $10.3 million during the first quarter of
2022 up $4.3 million, or 72%, compared to the prior year's quarter,
due to higher revenue offset by higher operating expenses
(excluding EBITDA adjustments) for the reasons previously
discussed.
Liquidity
As of March 31, 2022, we held cash and cash equivalents of $11.5
million. Our sources of cash also include operating cash flows
generated from the business and vendor financing. We expect our
uses of cash over the next twelve months to include operating
costs, capital expenditures and the repayment of amounts being
financed through our satellite vendor.
About Globalstar, Inc.
Globalstar pioneered personal safety by introducing its SPOT
Satellite GPS Messenger in 2007. Today, leveraging its low-earth
orbit (LEO) satellite constellation, Globalstar reliably connects
and protects assets, transmits key operational data, and saves
lives – from any location – for consumers, industrial companies and
government agencies in over 120 countries. With a portfolio that
includes SPOT GPS messengers, next-generation IoT products and
modems, and cloud-based telematics solutions, Globalstar’s cost
effective satellite-powered innovations give users visibility and
intelligence for improving safety and operational efficiencies.
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
March 31,
2022
2021
Revenue:
Service revenue
$
29,344
$
23,086
Subscriber equipment sales
3,428
3,843
Total revenue
32,772
26,929
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
10,794
9,077
Cost of subscriber equipment sales
2,566
2,899
Marketing, general and administrative
9,341
10,097
Depreciation, amortization, and
accretion
23,783
24,116
Total operating expenses
46,484
46,189
Loss from operations
(13,712
)
(19,260
)
Other (expense) income:
Interest income and expense, net of
amounts capitalized
(9,530
)
(11,574
)
Derivative loss
(486
)
(1,129
)
Foreign currency gain (loss)
3,232
(4,315
)
Other
117
22
Total other (expense) income
(6,667
)
(16,996
)
Loss before income taxes
(20,379
)
(36,256
)
Income tax expense
83
77
Net loss
$
(20,462
)
$
(36,333
)
Net loss per common share:
Basic
$
(0.01
)
$
(0.02
)
Diluted
(0.01
)
(0.02
)
Weighted-average shares outstanding:
Basic
1,797,671
1,679,754
Diluted
1,797,671
1,679,754
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2022
2021
Net loss
$
(20,462
)
$
(36,333
)
Interest income and expense, net
9,530
11,574
Derivative loss
486
1,129
Income tax expense
83
77
Depreciation, amortization, and
accretion
23,783
24,116
EBITDA
13,420
563
Non-cash compensation
1,233
1,137
Foreign exchange and other
(3,349
)
4,294
Shareholder litigation cost recovery
(1,000
)
—
Adjusted EBITDA (1)
$
10,304
$
5,994
(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
March 31,
2022
2021
Service
Equipment
Service
Equipment
Revenue
Duplex
$
6,146
$
130
$
6,655
$
293
SPOT
11,255
1,475
10,984
1,915
Commercial IoT
4,670
1,806
4,481
1,521
Engineering and other
7,273
17
966
114
Total revenue
$
29,344
$
3,428
$
23,086
$
3,843
Average subscribers
Duplex
43,565
45,687
SPOT
276,863
261,171
Commercial IoT
423,519
409,089
Other
13,346
27,487
Total average subscribers
757,293
743,434
ARPU (1)
Duplex
$
47.03
$
48.56
SPOT
13.55
14.02
Commercial IoT
3.68
3.65
(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/20220505006056/en/
Investor Contact Information: Denise Davila
investorrelations@globalstar.com
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