Globalstar Announces First Quarter 2020 Results
FINANCIAL REVIEW
Revenue
Total revenue for the first quarter of 2020 increased 7% from the first quarter of 2019 due primarily to engineering service revenue related to a network feasibility study, offset partially by declines in other revenue streams.
Service revenue from our subscriber-driven revenue streams declined by
The decline in SPOT service revenue in the first quarter of 2020 was due primarily to lower ARPU. Average SPOT subscribers were down during the first quarter of 2020; however, excluding involuntary churn of mostly non-revenue-generating subscribers in
Partially offsetting the declines in Duplex and SPOT service revenue was a 17% increase in Commercial IoT service revenue resulting from growth in our average subscriber base and higher ARPU. The higher average subscriber count was from increased activations of our SmartOne family of Commercial IoT devices during the last twelve months compared to the prior twelve-month period.
Subscriber equipment sales revenue decreased
We have diversified our customer portfolio over the last several years, but approximately 15% of our total revenue in 2019 was still generated by customers who operate predominantly in the oil and gas industry. Although the extent of the impact is uncertain, we expect our revenue to continue to be negatively impacted by the industry downturn reflected in both a reduction in the volume of subscriber equipment sales and lower service pricing.
Operating Loss
Operating loss decreased from
Net Income (Loss)
Net income (loss) fluctuated
Adjusted EBITDA
Adjusted EBITDA increased to
Liquidity
Cash and cash equivalents were
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 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
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Three Months Ended |
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2020 |
|
2019 |
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Revenue: |
|
|
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Service revenue |
$ |
28,935 |
|
$ |
26,119 |
|
||
Subscriber equipment sales |
|
3,259 |
|
|
3,959 |
|
||
Total revenue |
|
32,194 |
|
|
30,078 |
|
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Operating expenses: |
|
|
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Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) |
|
8,728 |
|
|
9,853 |
|
||
Cost of subscriber equipment sales |
|
2,643 |
|
|
3,149 |
|
||
Marketing, general and administrative |
|
11,091 |
|
|
11,606 |
|
||
Depreciation, amortization, and accretion |
|
23,817 |
|
|
23,801 |
|
||
Total operating expenses |
|
46,279 |
|
|
48,409 |
|
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Loss from operations |
|
(14,085 |
) |
|
(18,331 |
) |
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Other income (expense): |
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|
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Interest income and expense, net of amounts capitalized |
|
(14,010 |
) |
|
(12,870 |
) |
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Derivative (loss) gain |
|
(821 |
) |
|
57,008 |
|
||
Foreign currency (loss) gain |
|
(8,953 |
) |
|
86 |
|
||
Other |
|
(333 |
) |
|
(95 |
) |
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Total other (expense) income |
|
(24,117 |
) |
|
44,129 |
|
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(Loss) income before income taxes |
|
(38,202 |
) |
|
25,798 |
|
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Income tax expense |
|
21 |
|
|
27 |
|
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Net (loss) income |
$ |
(38,223 |
) |
$ |
25,771 |
|
||
|
|
|
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Net (loss) income per common share: |
|
|
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Basic |
$ |
(0.02 |
) |
$ |
0.02 |
|
||
Diluted |
|
(0.02 |
) |
|
(0.02 |
) |
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Weighted-average shares outstanding: |
|
|
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Basic |
|
1,557,960 |
|
|
1,448,318 |
|
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Diluted |
|
1,557,960 |
|
|
1,632,257 |
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Three Months Ended |
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2020 |
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2019 |
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Net (loss) income |
$ |
(38,223 |
) |
$ |
25,771 |
|
||
|
|
|
||||||
Interest income and expense, net |
|
14,010 |
|
|
12,870 |
|
||
Derivative loss (gain) |
|
821 |
|
|
(57,008 |
) |
||
Income tax expense |
|
21 |
|
|
27 |
|
||
Depreciation, amortization, and accretion |
|
23,817 |
|
|
23,801 |
|
||
EBITDA |
|
446 |
|
|
5,461 |
|
||
|
|
|
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Non-cash compensation |
|
1,313 |
|
|
1,448 |
|
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Foreign exchange and other |
|
9,001 |
|
|
(255 |
) |
||
Debt refinancing third party fees |
|
284 |
|
— |
|
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Bad debt reserve of aged IGO receivable |
— |
|
|
593 |
|
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Adjusted EBITDA (1) |
$ |
11,044 |
|
$ |
7,247 |
|
(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. |
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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. |
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Three Months Ended |
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2020 |
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2019 |
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Service |
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Equipment |
|
Service |
|
Equipment |
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Revenue |
|
|
|
|
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Duplex |
$ |
7,663 |
$ |
404 |
$ |
8,645 |
$ |
251 |
||||
SPOT |
|
12,123 |
|
1,407 |
|
13,095 |
|
1,591 |
||||
Commercial IoT |
|
4,310 |
|
1,413 |
|
3,698 |
|
2,072 |
||||
IGO |
|
91 |
— |
|
166 |
— |
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Engineering and other |
|
4,748 |
|
35 |
|
515 |
|
45 |
||||
Total Revenue |
$ |
28,935 |
$ |
3,259 |
$ |
26,119 |
$ |
3,959 |
||||
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Average Subscribers |
|
|
|
|
||||||||
Duplex |
|
52,054 |
|
|
59,978 |
|
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SPOT |
|
271,276 |
|
|
288,840 |
|
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Commercial IoT |
|
418,424 |
|
|
384,673 |
|
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IGO |
|
26,256 |
|
|
27,017 |
|
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Engineering and other |
|
883 |
|
|
953 |
|
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Total Average Subscribers |
|
768,893 |
|
|
761,461 |
|
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ARPU (1) |
|
|
|
|
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Duplex |
$ |
49.07 |
|
$ |
48.05 |
|
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SPOT |
|
14.90 |
|
|
15.11 |
|
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Commercial IoT |
|
3.43 |
|
|
3.20 |
|
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IGO |
|
1.16 |
|
|
2.05 |
|
(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. |
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