Global Eagle Entertainment Inc. (Nasdaq:ENT) ("Global Eagle" or the
"Company"), a leading provider of satellite-based connectivity and
media to global mobility markets across air, sea and land, today
provided a business update.
“While 2017 has been a year of transition for Global Eagle, we
are building a solid foundation to position our company for future
growth,” commented Jeff Leddy, CEO of Global Eagle.
“Importantly, we have strengthened key areas in finance and other
shared service functions, and continue to integrate past
acquisitions across our business lines.”
Under its new leadership, Global Eagle is further
professionalizing its business. This includes many new
hires as well as adding new leadership positions within
our finance, Content and Connectivity teams. The Company is
implementing new software tools designed to enhance operations,
improve the timeliness of our financial reporting and reduce future
extraordinary expenses, such as audit, professional
services and legal fees.
“Both the Content and Connectivity teams are winning new
business and major renewals that we will discuss during our
business-update call this afternoon, and both our Content and
Connectivity businesses are benefiting from strong secular growth
within their industries,” continued Mr. Leddy. “We have a number of
opportunities in front of us and are poised to execute on them in
the coming months. As we near the completion of the 2016
audit, we are focused on driving growth in 2018.”
Global Eagle and its auditors are strongly committed to filing
the Company’s 2016 Form 10-K by September 30, 2017 and to filing
its Q1 and Q2 2017 Form 10-Qs within 30 days thereafter.
Global Eagle obtained an extension from its Credit Agreement
lenders to make these filings within that timeline.
“We have made significant enhancements to our finance department
in the last six months as we drive to improve both our processes
and controls,” said Paul Rainey, CFO of Global Eagle. “We are
already seeing these benefits in accounting and other areas as we
near the close of our audit process. In addition, we are taking
tremendous steps forward across our business lines to improve
customer relations and make better informed decisions to enhance
performance.”
Financial Update
- For the fourth quarter 2016, Global Eagle expects to report
revenue of $157 million, net loss of $88 million and Adjusted
EBITDA* of $18.7 million. This compares to revenue of $113 million,
net loss of $4.8 million and Adjusted EBITDA of $15.5 million in
the fourth quarter 2015.
- For full year 2016, Global Eagle expects to report revenue of
$530 million, net loss of $109 million and Adjusted EBITDA of $57
million. This compares to revenue of $426 million, net loss of $2.1
million and Adjusted EBITDA of $50 million for full year 2015.
- As previously reported, the Company had approximately $48
million in cash as of September 6, 2017, and the outstanding
principal balance under its revolving credit facility was $50
million. The Company’s outstanding principal balance on its
term-loan facility is $497 million, and the Company has $82.5
million in aggregate principal amount outstanding of its 2.75%
convertible senior notes due 2035.
- Global Eagle separately announced today that it received a
notice of delisting of its securities from NASDAQ. The
Company intends to appeal the delisting, and has provided more
information on that process in a separate press release issued
today (link).
Webcast
Global Eagle will host a webcast to discuss its business
update today (Thursday, September 14, 2017) at 4:30 p.m.
ET (1:30 p.m. PT). The Company will make the webcast available
on the Investor Relations section of its website at
http://investors.geemedia.com/events.cfm. An archive of the webcast
replay will be on its website for 30 days following the event.
About Global Eagle
Global Eagle is a leading provider of media, content,
connectivity and data analytics to markets across air, sea and
land. Global Eagle offers a fully integrated suite of rich media
content and seamless connectivity solutions to airlines, cruise
lines, commercial ships, high-end yachts, ferries and land
locations worldwide. With approximately 1,500 employees and 50
offices on six continents, the Company delivers exceptional service
and rapid support to a diverse customer base. Find out more at:
www.GlobalEagle.com.
* About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with generally accepted
accounting principles, or GAAP, we present Adjusted EBITDA, which
is a non-GAAP financial measure, as a measure of our performance.
The presentation of Adjusted EBITDA is not intended to be
considered in isolation from, or as a substitute for, or superior
to, net income (loss) or any other performance measures derived in
accordance with GAAP or as an alternative to net cash provided by
operating activities or any other measures of our cash flows or
liquidity. For more information on this non-GAAP financial measure,
please see the table entitled “Reconciliation of GAAP Measure to
Non-GAAP Measure” at the end of this release.
Adjusted EBITDA is one of the primary measures used by our
management and board of directors to understand and evaluate our
financial performance and operating trends, including period to
period comparisons, to prepare and approve our annual budget and to
develop short and long term operational plans. Additionally,
Adjusted EBITDA is one of the primary measures used by the
compensation committee of our board of directors to establish the
funding targets for (and subsequent funding of) our annual bonus
pool for our employees and executives. We believe our presentation
of Adjusted EBITDA is useful to investors both because it allows
for greater transparency with respect to key metrics used by
management in its financial and operational decision-making and our
management frequently uses it in discussions with investors,
commercial bankers, securities analysts and other users of our
financial statements.
We define Adjusted EBITDA as net income (loss) before income tax
expense (benefit), interest income (expense), change in fair value
of financial instruments, other (income) expense, depreciation and
amortization, (including depreciation and amortization expense
relating to equity method investments), as further adjusted to
eliminate the impact of, when applicable, stock-based compensation,
acquisition, integration and transaction costs, and restructuring
charges. Other income (expense), acquisition, integration and
transaction costs and restructuring charges include such items,
when applicable, as (a) income (loss) from investments, foreign
currency exchange gains (losses), loss on disposal of fixed assets
and other income (expenses), (b) non-cash GAAP purchase accounting
adjustments for certain deferred revenue and costs, (c) legal,
accounting and other professional fees directly attributable to
acquisition activity, (d) employee severance and retention payments
and third party professional fees directly attributable to
acquisition or corporate realignment activities, (e) legal
settlements (and related professional fees) or reserves for legal
settlements in the period that pertain to historical matters that
existed at acquired companies prior to their purchase date, and (f)
restructuring expenses and employee termination benefits.
Management does not consider these costs to be indicative of our
core operating results.
Cautionary Note Concerning Forward-Looking
Statements
We make “forward-looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including with respect to our expected
financial performance, the timing of filing our delinquent Exchange
Act reports and the NASDAQ delisting process and related appeal.
These forward-looking statements are based on information available
to us as of the date hereof and on our current expectations,
forecasts and assumptions, and involve substantial risks and
uncertainties. The financial performance information included in
this release for fourth quarter and full-year 2016 is unaudited,
and we may learn new information during the completion and
finalization of our
quarter and year-end financial and accounting
procedures that may alter our final financial-performance results
for those periods versus the information included
herein and/or may require that we restate our financial
statements for one or more prior fiscal periods. In addition,
actual results may vary materially from those expressed or implied
by the forward looking statements herein due to a variety of other
factors, including: our ability to remediate material weaknesses in
our internal control over financial reporting and to complete such
remediation in a timely manner; our ability to maintain effective
internal control over financial reporting; our ability to integrate
businesses or technologies we acquire
and realize run-rate synergies from those
acquisitions; our dependence on our existing relationship and
agreement with Southwest Airlines; increased demand by customers
for greater bandwidth, speed and performance and increased
competition from new technologies and market entrants; customer
attrition due to direct arrangements between satellite providers
and customers; pricing pressure in our Content segment and a
reduction in the use of intermediary content service providers; a
reduction or elimination of the time between our receipt of content
and it being made available to the rental or home viewing market; a
reduction in the volume or quality of content produced by studios,
distributors or other content
providers; increased on-board use of personal
electronic devices and content accessed and downloaded prior to
travel, or regulators’ prohibitions on any such devices onboard
aircraft in some jurisdictions; our ability to compete as a content
provider against “over the top” download services and other
companies that offer in-flight entertainment systems; the
costs to defend and/or settle current and potential future civil
intellectual property lawsuits and related claims for
indemnification as well as pending securities class action claims;
limitations on the cash flow available to make investments due to
our substantial indebtedness and our ability to generate sufficient
cash flow to make payments thereon or maintain liquidity; our
ability to remain in compliance with the operational and financial
covenants in our credit agreement; our ability to repay the
principal amount of our convertible notes at maturity, raise the
funds necessary to settle conversions of our convertible notes or
repurchase our convertible notes upon a fundamental change or on
specified repurchase dates or due to future indebtedness; our
ability to retain key members of senior management; and other risks
and uncertainties set forth herein and in our most recent
Annual Report on Form 10-K and subsequently
filed Quarterly Reports on Form 10-Q.
The forward-looking statements herein speak only as of the date
the statements are made (which is the date of this press
release). You should not put undue reliance on any
forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities
laws. If we do update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
Financial Information
The table below presents financial results for the three and
twelve month periods ended December 31, 2016 and 2015.
|
Global Eagle Entertainment Inc. |
Condensed Consolidated Statements of
Operations |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenue |
$ |
157,017 |
|
|
$ |
113,235 |
|
|
$ |
530,008 |
|
|
$ |
426,030 |
|
Cost of
sales |
|
111,536 |
|
|
|
72,191 |
|
|
|
366,738 |
|
|
|
279,156 |
|
Gross
Margin |
|
45,481 |
|
|
|
41,044 |
|
|
|
163,270 |
|
|
|
146,874 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Sales and
marketing |
|
11,398 |
|
|
|
4,647 |
|
|
|
30,951 |
|
|
|
17,705 |
|
Product
development |
|
12,403 |
|
|
|
7,163 |
|
|
|
37,481 |
|
|
|
28,610 |
|
General
and administrative |
|
32,122 |
|
|
|
23,418 |
|
|
|
114,517 |
|
|
|
77,715 |
|
Provision
for legal settlements |
|
1,961 |
|
|
|
- |
|
|
|
43,649 |
|
|
|
4,250 |
|
Amortization of intangible assets |
|
11,881 |
|
|
|
7,720 |
|
|
|
35,936 |
|
|
|
26,994 |
|
Goodwill
impairment |
|
57,000 |
|
|
|
- |
|
|
|
57,000 |
|
|
|
- |
|
Restructuring charges |
|
- |
|
|
|
43 |
|
|
|
- |
|
|
|
411 |
|
Total operating
expenses |
|
126,765 |
|
|
|
42,991 |
|
|
|
319,534 |
|
|
|
155,685 |
|
Loss from
operations |
|
(81,284 |
) |
|
|
(1,947 |
) |
|
|
(156,264 |
) |
|
|
(8,811 |
) |
Other income (expense),
net: |
|
|
|
|
|
|
|
Interest
expense, net |
|
(10,335 |
) |
|
|
(861 |
) |
|
|
(18,164 |
) |
|
|
(2,492 |
) |
Income
from equity method investments |
|
|
|
|
|
|
|
|
|
1,638 |
|
|
|
- |
|
Change in
fair value of derivatives |
|
7,041 |
|
|
|
(1,928 |
) |
|
|
25,023 |
|
|
|
11,938 |
|
Other
(expense) income, net |
|
(1,703 |
) |
|
|
675 |
|
|
|
(6,326 |
) |
|
|
(1,140 |
) |
Loss before income
taxes |
|
(84,643 |
) |
|
|
(4,061 |
) |
|
|
(152,028 |
) |
|
|
(505 |
) |
Income
tax expense (benefit) |
|
3,322 |
|
|
|
749 |
|
|
|
(42,845 |
) |
|
|
1,621 |
|
Net income (loss) |
$ |
(87,965 |
) |
|
$ |
(4,810 |
) |
|
$ |
(109,183 |
) |
|
$ |
(2,126 |
) |
|
|
|
|
|
|
|
|
Net loss per share |
|
|
|
|
|
|
|
Basic |
$ |
(1.10 |
) |
|
$ |
(0.06 |
) |
|
$ |
(1.34 |
) |
|
$ |
(0.03 |
) |
Diluted |
$ |
(1.10 |
) |
|
$ |
(0.06 |
) |
|
$ |
(1.34 |
) |
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
85,369 |
|
|
|
78,476 |
|
|
|
81,269 |
|
|
|
77,558 |
|
Diluted |
|
85,369 |
|
|
|
78,476 |
|
|
|
81,269 |
|
|
|
78,394 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Measure to Non-GAAP
Measure |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net Income |
($88.0) |
|
|
($4.8) |
|
|
($109.2) |
|
|
($2.1) |
|
Income Tax |
|
3.3 |
|
|
|
0.7 |
|
|
|
(42.8) |
|
|
|
1.5 |
|
Other Income (Expense)
1 |
|
5.0 |
|
|
|
2.1 |
|
|
|
(0.5) |
|
|
|
(8.3) |
|
Depreciation and
Amortization |
|
83.4 |
|
|
|
10.7 |
|
|
|
121.5 |
|
|
|
36.6 |
|
Stock-based
Compensation |
|
2.6 |
|
|
|
2.0 |
|
|
|
10.7 |
|
|
|
8.3 |
|
Acquisition and
Realignment Costs 2 |
|
12.3 |
|
|
|
4.7 |
|
|
|
77.1 |
|
|
|
13.7 |
|
Restructuring Charges
3 |
|
0.0 |
|
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.5 |
|
Adjusted
EBITDA |
$18.7 |
|
|
$15.5 |
|
|
$56.9 |
|
|
$50.0 |
|
|
|
|
|
|
|
|
|
(1) Other Income (Expense) principally includes income (loss)
from investments, foreign currency exchange gains (losses) and
loss on disposal of fixed assets. Management does not
consider these costs to be indicative of our core operating
results.
(2) Acquisition and Realignment Costs include such items, when
applicable, as (a) GAAP purchase accounting adjustments for certain
deferred revenue and costs, (b) legal, accounting and other
professional fees directly attributable to acquisition activity as
well as fees related to extraordinary efforts for the completion of
the 2016 audit, (c) employee severance and retention payments and
third party professional fees directly attributable to acquisition
or corporate realignment activities and (d) legal settlements or
reserves for legal settlements in the period that pertain to
historical matters that existed at acquired companies prior to
their purchase date. Management does not consider these costs
to be indicative of our core operating results.
(3) Restructuring Charges includes restructuring expenses
pursuant to our integration plan announced on September 23,
2014. Management does not consider these costs to be
indicative of our core operating results.
Contact:
Peter A. Lopez
Vice President, Investor Relations
+1 310-740-8624
investor.relations@geemedia.com
pr@geemedia.com
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