Globalstar, Inc. (NYSE American: GSAT) today announced its
operating and financial results for the quarter ended March 31,
2023.
"Globalstar had record growth in the first quarter, with
operating income up over 150% and an over 80% reduction in GAAP net
loss, each led by a nearly 80% increase in total revenue over the
first quarter of 2022, and we are poised to deliver sustainable
revenue growth throughout 2023. Notably, Adjusted EBITDA increased
over 200% with a healthy margin of 56%, up from 31% over the prior
year's quarter" commented Dave Kagan, Chief Executive Officer of
Globalstar. Kagan continued, “In addition to record financial
growth and as highlighted in this release, we continue to execute
along our four pillars - wholesale, legacy, IoT and terrestrial
spectrum - which together make Globalstar a disruptive player in
our industry."
Jay Monroe, Globalstar Executive Chairman, concluded, “It would
be hard to ignore the market and speculative implications around
the almost daily satellite headlines related to competitive service
offerings from new or existing satellite providers. While most
alternatives are still in concept and testing mode, Globalstar is
today enabling groundbreaking service offerings that are saving
lives across our product portfolio. Of course, we do not believe
the current market price of our stock reflects our company's value.
All we can do is continue to execute.”
OPERATIONAL HIGHLIGHTS
Balance Sheet Improvements
During the quarter, we paid off the remaining balances due under
the 2019 Facility Agreement and the vendor financing arrangement
with MDA, using proceeds from the sale of $200.0 million in
aggregate principal amount of non-convertible notes, which were
issued net of a 5% OID and financing costs. This final step in a
series of achievements completed our balance sheet
improvements.
Commercial IoT
We recently announced the Realm enablement suite, which is
expected to drive efficiency and time to market for the millions of
IoT devices in our active sales pipeline. This technology is
expected to continue the growth in Commercial IoT, which we discuss
further in the Financial Review section below.
Terrestrial Spectrum Authority
Mr. Monroe commented, "I recently mentioned publicly that we
were in negotiations with several potential users of Band 53. The
recently completed deals outlined below are just examples of what
have resulted from these negotiations. We are excited about our
progress, but nowhere near finished. With our Band 53 ecosystem now
in place, we are bringing in deals, and it’s important to note our
discussions are with a global audience. These milestones,
particularly for a company of our size, are significant and
testaments to the importance of our spectrum assets."
Recent accomplishments include:
- This week we signed an agreement for a unique terrestrial
service utilizing Band 53 that is expected to generate significant
near-term revenue as engineering analysis is completed and
validated, after which the agreement would convert to a long-term
lease generating additional revenue during the lease term. This
service is incremental to our revenue as the nature of the network
architecture does not affect current or future terrestrial or
satellite services.
- We received terrestrial authority for Band 53 in Spain. With
close to 50 million POPs, Spain has brought the total number of
authorized countries to 11, and we have approval processes ongoing
in multiple European markets.
- We signed and announced a collaboration agreement with Qualcomm
for them to complete Band n53 enablement in their chipsets for both
infrastructure and mobile devices. Together with Qualcomm, we are
approaching their global system integrator network with an easy to
deploy, private 5G service over Band n53. With Qualcomm’s support,
we are adding more device and equipment OEMs to broaden our current
product portfolio. We expect that operations in dynamic, remote and
automated environments will be early adopters of the new
Qualcomm-based equipment as Band n53 is a resource they can deploy
across geographies.
FINANCIAL REVIEW
Total Revenue
Total revenue increased $25.9 million, or 79%, to $58.6 million
during the first quarter of 2023 due to increases in both service
revenue and revenue generated from subscriber equipment sales
compared to the first quarter of 2022.
Service Revenue
Service revenue increased $23.6 million or 80% during the first
quarter of 2023 due primarily to higher wholesale capacity service
revenue. This category of revenue includes fees earned under the
previously disclosed Service Agreements. The increase from the
prior year quarter resulted primarily from the launch of Phase 1
service in November 2022. Additionally, in connection with the
amendment of the Service Agreements in February 2023, Partner
agreed to pay us $6.5 million as consideration related to
performance obligations completed in prior periods. Accordingly, we
recognized this revenue during the first quarter of 2023.
Our subscriber service revenue also increased as a category led
by Commercial IoT, an important area of growth for our
business.
Commercial IoT service revenue increased 11% from the first
quarter of 2022 due to positive variances in both our average
subscriber base and ARPU. Contrary to the headwinds that we
experienced last year due to production delays, we are now seeing
steady growth in net subscriber additions, resulting from a 74%
increase in gross activations over the last twelve months compared
to the preceding twelve-month period. We have now fulfilled the
back orders that accumulated in 2022 following production delays
for certain of our Commercial IoT products and expect to continue
this momentum as we place manufacturing orders in volumes
significantly above our historical levels in an effort to keep up
with growing demand.
Looking to legacy services, SPOT increased modestly due to an
increase in average pricing, offset partially by lower average
subscribers. Gross activations over the last twelve months were
slower following several months without equipment sales of two of
our core SPOT products. We are now in full production of these
devices and, importantly, saw gross adds in the month of March that
were nearly double the prior month. Duplex service revenue declined
at an expected rate due to attrition in that subscriber base,
offset partially by an ARPU increase.
Subscriber Equipment Sales
Subscriber equipment sales increased $2.3 million or 66% in the
first quarter of 2023 compared to the first quarter of 2022
reaching its highest level in several years. Device sales have
improved significantly in 2023, following resolution of the supply
chain disruptions that negatively impacted sales during 2022.
Commercial IoT equipment sales revenue increased more than 100%
from the prior year's quarter for the second consecutive quarter.
While this trend is driven partially by the fulfillment of sales
orders placed in a previous period, much of it results from overall
higher demand of our IoT products and services. This demand is
accelerating as our VARs experience continued success across
various verticals and applications.
SPOT equipment revenue increased 31% from the prior year's first
quarter as we resumed production of one of our core devices. Today,
all SPOT products are being manufactured in the ordinary course of
business; therefore, we expect equipment sales to continue to
increase as we move through 2023.
Income (Loss) from Operations
Income from operations was $7.2 million during the first quarter
of 2023 compared to loss from operations of $13.7 million during
the first quarter of 2022. This improvement was due predominantly
to an increase in revenue (discussed above) offset partially by an
increase in operating expenses due primarily to higher cost of
services, cost of subscriber equipment sales, and management,
general and administrative costs (MG&A).
Cost of services was higher due primarily to lease and related
occupancy costs associated with new gateway sites as we expanded
and upgraded our global ground network to support wholesale
capacity services. A significant portion of these costs are
reimbursed to us in connection with the Service Agreements, and
this consideration is being recognized as revenue.
The increase in cost of subscriber equipment sales is in line
with the increase in equipment revenue, yielding consistent margin
percentages in both periods.
MG&A costs were higher during the first quarter of 2023 due
primarily to stock-based compensation costs incurred from certain
performance-based restricted stock awards that vested upon the
achievement of specific targets, including EBITDA and execution of
terrestrial spectrum agreements. The increase was also attributable
to the release of a $1.0 million accrual for professional services
that we determined was no longer owed in the first quarter of
2022.
Net Loss
Net loss decreased to $3.5 million for the first quarter of 2023
compared to $20.5 million for the first quarter of 2022. The net
loss during the first three months of 2023 was due primarily to a
$10.4 million non-cash loss on extinguishment of debt following the
payoff of the 2019 Facility Agreement. This extinguishment loss
offset higher income from operations of $20.9 million and lower
interest expense of $7.5 million compared to the prior year's first
quarter. The decrease in interest expense resulted from: (i) higher
capitalized interest of $4.3 million (which decreases interest
expense) due to an increase in capital expenditures as we complete
work related to our new satellites, and (ii) lower gross interest
costs totaling $3.2 million following the payoff of roughly half of
the 2019 Facility Agreement in November 2022.
Adjusted EBITDA
Adjusted EBITDA was $32.6 million during the first quarter of
2023 up $22.3 million, or 216%, compared to the prior year's
quarter due to higher revenue offset partially by higher operating
expenses (excluding EBITDA adjustments) for the reasons previously
discussed. Adjusted EBITDA is a non-GAAP financial measure. For
more information on its usage and presentation, as well as a
reconciliation to GAAP net income (loss), refer to “Reconciliation
of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA”.
Liquidity
As of March 31, 2023, we held cash and cash equivalents of $20.5
million compared to $32.1 million as of December 31, 2022. Over the
next twelve months, our sources of cash are expected to include
primarily operating cash flows generated from the business as well
as service prepayments from our Partner under the Service
Agreements that will be used to fund capital expenditures
associated with the new satellites. Other uses of cash will include
the operating costs of the business.
FINANCIAL OUTLOOK
We reiterate our previously issued financial guidance for full
year 2023 (excluding revenue from terrestrial spectrum
opportunities) with anticipated results included below.
- Total revenue between $185 million and $230 million
- Adjusted EBITDA margin of approximately 55%
We expect these financial metrics to continue to improve
significantly by 2026, which is expected to be the first full year
in which the new satellites are operational, with total revenue
expected to increase by approximately 35% compared to the 2023
forecast.
CONFERENCE CALL INFORMATION
As previously announced, the Company will host a conference call
to discuss its results at 9:00 a.m. Eastern Time (ET) on Friday,
May 5, 2023. Details are as follows:
Earnings Call:
The earnings call will be available via
webcast from the following link.
Webcast Link:
https://edge.media-server.com/mmc/p/cvpcsoxe
To participate in the earnings call via
teleconference, participants should register at the following link
to receive an email containing the dial-in number and unique
passcode.
Participant Teleconference Registration
Link:
https://register.vevent.com/register/BIb386fd8b68b24f689b10161c374e40a6
Audio Replay:
For those unable to participate in the
live call, a replay of the webcast will be available in the
Investor Relations section of the Company's website.
About Globalstar, Inc.
Globalstar empowers its customers to connect, transmit and
communicate in smarter ways – easily, quickly, securely, and
affordably – offering reliable satellite and terrestrial
connectivity services as an international telecom infrastructure
provider. The Company’s LEO satellite constellation assures secure
data transmission for connecting and protecting assets, delivering
key operational data, and saving lives – from any location – for
consumers, businesses, and government agencies across the globe.
Globalstar’s terrestrial spectrum, Band 53/n53, offers carriers,
cable companies, and system integrators a versatile, fully licensed
channel with a growing ecosystem to improve customer wireless
connectivity. In addition to SPOT GPS messengers, Globalstar offers
next-generation IoT hardware and software products for efficiently
tracking and monitoring assets, processing smart data at the edge,
and managing analytics with cloud-based telematics solutions to
drive safety, productivity, and profitability.
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.
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, the success of current and potential future
applications for our terrestrial spectrum, future increases in our
revenue and profitability, our ability to meet our obligations
under, and profit from, the Service Agreements, 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,
2023
2022
Revenue:
Service revenue
$
52,954
$
29,344
Subscriber equipment sales
5,690
3,428
Total revenue
58,644
32,772
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
11,820
10,794
Cost of subscriber equipment sales
4,309
2,566
Marketing, general and administrative
13,391
9,341
Depreciation, amortization, and
accretion
21,933
23,783
Total operating expenses
51,453
46,484
Income (loss) from operations
7,191
(13,712
)
Other (expense) income:
Loss on extinguishment of debt
(10,403
)
—
Interest income and expense, net of
amounts capitalized
(2,032
)
(9,530
)
Derivative loss
—
(486
)
Foreign currency gain
1,907
3,232
Other
(99
)
117
Total other expenses
(10,627
)
(6,667
)
Loss before income taxes
(3,436
)
(20,379
)
Income tax expense
44
83
Net loss
$
(3,480
)
$
(20,462
)
Net loss attributable to common
shareholders
(6,095
)
(20,462
)
Net loss per common share:
Basic
$
0.00
$
(0.01
)
Diluted
0.00
(0.01
)
Weighted-average shares outstanding:
Basic
1,811,831
1,797,671
Diluted
1,811,831
1,797,671
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Net loss
$
(3,480
)
$
(20,462
)
Interest income and expense, net
2,032
9,530
Derivative loss
—
486
Income tax expense
44
83
Depreciation, amortization, and
accretion
21,933
23,783
EBITDA
20,529
13,420
Non-cash compensation
3,760
1,233
Foreign exchange gain and other
(1,808
)
(3,349
)
Non-cash consideration, net, associated
with wholesale capacity contract (2)
(310
)
—
Non-cash shareholder litigation cost
recovery
—
(1,000
)
Loss on extinguishment of debt
10,403
—
Adjusted EBITDA (1)
$
32,574
$
10,304
(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-cash or
non-recurring charges as applicable. Management uses Adjusted
EBITDA 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.
(2)
Includes significant financing component
associated with prepayments made by the customer under the Service
Agreements recorded as deferred revenue as well as a reduction to
revenue associated with the non-cash fair value associated with
consideration paid to the customer under the Service Agreements in
the form of warrants.
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING
METRICS
(In thousands, except subscriber
and ARPU data)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Service
Equipment
Service
Equipment
Revenue
Subscriber
Duplex
$
5,751
$
19
$
6,146
$
130
SPOT
11,314
1,926
11,255
1,475
Commercial IoT
5,178
3,812
4,670
1,806
Wholesale capacity
30,411
—
6,843
—
Engineering and other
300
(67
)
430
17
Total revenue
$
52,954
$
5,690
$
29,344
$
3,428
Average subscribers
Duplex
36,616
43,565
SPOT
266,067
276,863
Commercial IoT
462,077
423,519
Other
400
13,346
Total average subscribers
765,160
757,293
ARPU (1)
Duplex
$
52.35
$
47.03
SPOT
14.17
13.55
Commercial IoT
3.74
3.68
(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/20230505005069/en/
Investor Contact Information:
investorrelations@globalstar.com
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