Globalstar Announces Third Quarter 2019 Results
OPERATIONAL HIGHLIGHTS
Financing Update
We are in the final stages of completing the refinancing of our capital structure by executing an amendment and partial paydown of our existing senior secured credit facility agreement ("Facility Agreement") and raising a new second lien term loan facility ("Second Lien Facility").
As previously announced, we have reached an agreement in principle with our senior lenders under the Facility Agreement on an amendment of certain key terms. This amendment would provide primarily for (i) the prepayment of the next three scheduled principal payments using proceeds from the Second Lien Facility, (ii) revisions to the remaining repayment schedule to reduce the amount of principal payments required prior to maturity, leaving a final principal balance of approximately
As part of this amendment, we are also finalizing the Second Lien Facility, the proceeds from which would be used to pay down the Facility Agreement and pay in full all amounts outstanding under the bridge financing raised in
Spectrum Update
In
Engineering and standards process work continues on 3GPP as we work to standardize Band 53 carrier aggregation with both CBRS and 5 GHz unlicensed having already secured both base station and user equipment approvals. Band 53 can also be aggregated with additional licensed channels and future authorities may provide for such opportunities. Over the coming six months, we remain focused on securing the 5G New Radio status for Band 53 which will provide standardization for Band 53 in 5G systems going forward.
Product Introductions
In
In
Strategic Partnerships
In
We also announced our expanding partnership with
FINANCIAL REVIEW
Revenue
Total revenue for the third quarter of 2019 decreased
The increase in service revenue was due primarily to increases in ARPU across all core product types. The improvement in Duplex ARPU resulted predominantly from customers migrating to or activating on plans higher than prior year ARPU. Additionally, Commercial IoT service revenue increased 28% due to increases in both ARPU and average subscribers. The increase in ARPU was driven in part by higher usage and a more favorable blend of rate plans in place during 2019 based on the product mix of our subscriber base. Offsetting these favorable variances were declines in the average number of SPOT and Duplex subscribers. Involuntary churn of nonpaying customers was the primary driver of the SPOT subscriber decline; excluding this cleanup, the SPOT subscriber base would have been generally flat from third quarter of 2018. On the Duplex front, we introduced an improved version of our Sat-Fi2® device in
The decrease in revenue from equipment sales was due primarily to a lower average selling price of our SPOT equipment due to summer pricing promotions during the third quarter of 2019; we did not run similar promotions during the third quarter of 2018. While these promotions decrease the selling price of our hardware, we expect the discounts to drive future activations and, therefore, recurring high-margin service revenue. Revenue generated from Duplex and Commercial IoT equipment sales was impacted by the mix of products sold in the respective quarters.
Operating Loss
Operating loss decreased from
Net Income
Net income increased
Adjusted EBITDA
Adjusted EBITDA decreased 2% to
CONFERENCE CALL
The Company will conduct an investor conference call to discuss its financial results and the expected refinancing following the execution of the related definitive documentation.
About
Note that all SPOT products described in this press release are the products of
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 close of a financing arrangement, 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
GLOBALSTAR, INC.
|
|||||||
|
|||||||
|
Three Months Ended
|
||||||
|
2019 |
|
2018 |
||||
Revenue: |
|
|
|
||||
Service revenue |
$ |
34,152 |
|
|
$ |
29,898 |
|
Subscriber equipment sales |
4,462 |
|
|
5,794 |
|
||
Total revenue |
38,614 |
|
|
35,692 |
|
||
Operating expenses: |
|
|
|
||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) |
9,216 |
|
|
9,429 |
|
||
Cost of subscriber equipment sales |
4,482 |
|
|
4,426 |
|
||
Marketing, general and administrative |
12,895 |
|
|
15,061 |
|
||
Depreciation, amortization, and accretion |
24,026 |
|
|
24,738 |
|
||
Total operating expenses |
50,619 |
|
|
53,654 |
|
||
Operating loss |
(12,005 |
) |
|
(17,962 |
) |
||
Other income (expense): |
|
|
|
||||
Interest income and expense, net of amounts capitalized |
(14,471 |
) |
|
(13,358 |
) |
||
Derivative gain |
50,156 |
|
|
39,059 |
|
||
Other |
(2,529 |
) |
|
1,331 |
|
||
Total other income (expense) |
33,156 |
|
|
27,032 |
|
||
Net income before income taxes |
21,151 |
|
|
9,070 |
|
||
Income tax expense |
40 |
|
|
51 |
|
||
Net income |
$ |
21,111 |
|
|
$ |
9,019 |
|
|
|
|
|
||||
Net income (loss) per common share: |
|
|
|
||||
Basic |
$ |
0.01 |
|
|
$ |
0.01 |
|
Diluted |
(0.01 |
) |
|
(0.02 |
) |
||
Weighted-average shares outstanding: |
|
|
|
||||
Basic |
1,451,703 |
|
|
1,264,516 |
|
||
Diluted |
1,647,734 |
|
|
1,427,800 |
|
GLOBALSTAR, INC.
|
|||||||||
|
|||||||||
|
|
Three Months Ended |
|||||||
|
|
September 30, |
|||||||
|
|
2019 |
|
2018 |
|||||
Net income |
$ |
21,111 |
|
|
$ |
9,019 |
|
||
|
|
|
|
|
|||||
|
Interest income and expense, net |
14,471 |
|
|
13,358 |
|
|||
|
Derivative gain |
(50,156 |
) |
|
(39,059 |
) |
|||
|
Income tax expense |
40 |
|
|
51 |
|
|||
|
Depreciation, amortization, and accretion |
24,026 |
|
|
24,738 |
|
|||
EBITDA |
9,492 |
|
|
8,107 |
|
||||
|
|
|
|
|
|||||
|
Non-cash compensation |
1,419 |
|
|
1,536 |
|
|||
|
Foreign exchange and other |
2,276 |
|
|
(1,398 |
) |
|||
|
Debt refinancing third party fees |
2,403 |
|
|
— |
|
|||
|
Merger and litigation-related costs |
206 |
|
|
3,919 |
|
|||
|
Change to estimated impact upon adoption of ASC 606 |
(3,885 |
) |
|
— |
|
|||
Adjusted EBITDA (1) |
$ |
11,911 |
|
|
$ |
12,164 |
|
||
(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. |
||||||||
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.
|
|||||||||||||||||
|
|||||||||||||||||
|
|
|
Three Months Ended |
||||||||||||||
|
|
|
September 30, |
||||||||||||||
|
|
|
2019 |
|
2018 |
||||||||||||
|
|
|
Service |
|
Equipment |
|
Service |
|
Equipment |
||||||||
Revenue |
|
|
|
|
|
|
|
|
|||||||||
|
Duplex (2) |
|
$ |
12,704 |
|
|
$ |
349 |
|
|
$ |
12,213 |
|
|
$ |
436 |
|
|
SPOT |
|
12,482 |
|
|
1,880 |
|
|
12,957 |
|
|
2,970 |
|
||||
|
Commercial IoT |
|
4,526 |
|
|
2,182 |
|
|
3,542 |
|
|
2,356 |
|
||||
|
IGO |
|
139 |
|
|
— |
|
|
257 |
|
|
— |
|
||||
|
Other |
|
416 |
|
|
51 |
|
|
929 |
|
|
32 |
|
||||
|
Total Revenue |
|
$ |
30,267 |
|
|
$ |
4,462 |
|
|
$ |
29,898 |
|
|
$ |
5,794 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average Subscribers |
|
|
|
|
|
|
|
|
|||||||||
|
Duplex |
|
57,091 |
|
|
|
|
66,004 |
|
|
|
||||||
|
SPOT |
|
280,632 |
|
|
|
|
292,521 |
|
|
|
||||||
|
Commercial IoT |
|
412,180 |
|
|
|
|
361,472 |
|
|
|
||||||
|
IGO |
|
26,378 |
|
|
|
|
26,196 |
|
|
|
||||||
|
Other |
|
912 |
|
|
|
|
1,007 |
|
|
|
||||||
|
Total Average Subscribers |
|
777,193 |
|
|
|
|
747,200 |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
ARPU (1) |
|
|
|
|
|
|
|
|
|||||||||
|
Duplex (2) |
|
$ |
74.17 |
|
|
|
|
$ |
61.68 |
|
|
|
||||
|
SPOT |
|
14.83 |
|
|
|
|
14.76 |
|
|
|
||||||
|
Commercial IoT |
|
3.66 |
|
|
|
|
3.27 |
|
|
|
||||||
|
IGO |
|
1.76 |
|
|
|
|
3.27 |
|
|
|
||||||
(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. |
||||||||||||||||
(2) |
We recorded an out-of-period adjustment of $3.9 million during the third quarter of 2019 as a result of a change in the estimated impact of the adoption of ASC 606 on January 1, 2018. This adjustment, which increased Duplex service revenue, is excluded from service revenue and ARPU in the table above. |
||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20191112006005/en/
Source:
Investor Contact Information:
Marcy Fluitt
[email protected]