Globalstar Announces Second Quarter 2019 Results
OPERATIONAL HIGHLIGHTS
Financing Update
We are actively working to complete a transaction that would improve our capital structure and address our current liquidity concerns, by, among other things, limiting the amount of principal payments we are required to make on our indebtedness prior to its maturity. We are currently pursuing two alternative transactions: (i) a complete refinancing of our existing debt and (ii) an amendment to our current debt BPIFAE Facility Agreement coupled with a new second lien credit facility.
With regard to the refinancing, we believe we are nearing an agreement on commercial terms for new first and second lien senior secured loan facilities with institutional financial and strategic lenders, including Thermo. This proposed financing is expected to be in the following form:
-
a senior secured first lien term loan facility with an aggregate principal amount of
$200 million and a maturity of five years; and -
a senior secured second lien term loan facility with an aggregate principal amount of
$150 million and a maturity of six years.
If this financing is consummated, we expect that all amounts outstanding under our existing Facility Agreement and under the bridge financing raised in
With regard to the amendment alternative, we have reached an agreement in principle with our lenders under the BPIFAE Facility Agreement on an amendment of certain key terms. While final amended terms are subject to definitive documentation, we expect that this amendment would provide for (i) prepayment of the next four scheduled principal payments using primarily proceeds from a new second lien term loan facility, (ii) revisions to the remaining repayment schedule to reduce the amount of payments of principal required prior to maturity, and (iii) a reset of financial covenant levels together with an extension of our ability to make equity cures.
In consultation with the Strategic Review Committee of our Board of Directors and our financial advisors, we intend to select the alternative that is in the best interest of the company. We seek to have one of these financing alternatives consummated during the third quarter of 2019.
Spectrum Update
In
We continue to be active at 3GPP achieving UE conformance approvals during the quarter and beginning the process of adding carrier aggregation with both CBRS (Band 48) and 5 GHz unlicensed (Band 46). We have also initiated the work on securing Band 53 as 5G-enabled through a 5G NR or New Radio designation (“n53”). This is the next evolutionary step as we work towards Band 53 being embedded in next generation wireless systems.
Strategic Partnerships
In
In
In
Automotive Industry Update
We continue to make meaningful progress on our automotive initiatives as we are now distributing existing products in the commercial trucking market through several major automotive retailers, we have signed a technology sharing and licensing agreement with a major global Tier 1 supplier to develop an automotive grade solution around our core technology, and we are conducting field trials with a major OEM with our latest Duplex voice and data products. Additionally, we are in discussions with multiple parties to distribute our SPOT line of products to the automotive market with a focus on off-road safety.
FINANCIAL REVIEW
Revenue
Total revenue for the second quarter of 2019 decreased
Our subscriber base grew over the last twelve months to total average subscribers of 772,807 in the second quarter of 2019 from 733,964 in the second quarter of the prior year. However, the decrease in service revenue was due primarily to lower average Duplex subscribers which reduced revenue by
The decrease in revenue from equipment sales was due primarily to a lower volume of Commercial IoT device sales. Initial orders placed for our SmartOne SolarTM device, which generated
Operating Income (Loss)
Operating income (loss) fluctuated from income of
Net Income (Loss)
Net income (loss) fluctuated by
Adjusted EBITDA
Adjusted EBITDA decreased to
CONFERENCE CALL
The Company will conduct an investor conference call to discuss its financial results and the expected amendment or 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
Three Months Ended
|
||||||
|
2019 |
|
2018 |
||||
Revenue: |
|
|
|
||||
Service revenue |
$ |
26,700 |
|
|
$ |
27,995 |
|
Subscriber equipment sales |
4,491 |
|
|
5,731 |
|
||
Total revenue |
31,191 |
|
|
33,726 |
|
||
Operating expenses: |
|
|
|
||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) |
9,395 |
|
|
9,526 |
|
||
Cost of subscriber equipment sales |
3,578 |
|
|
4,170 |
|
||
Marketing, general and administrative |
11,022 |
|
|
15,944 |
|
||
Revision to contract termination charge |
— |
|
|
(20,478 |
) |
||
Depreciation, amortization, and accretion |
23,852 |
|
|
22,616 |
|
||
Total operating expenses |
47,847 |
|
|
31,778 |
|
||
Operating income (loss) |
(16,656 |
) |
|
1,948 |
|
||
Other income (expense): |
|
|
|
||||
Interest income and expense, net of amounts capitalized |
(12,808 |
) |
|
(10,305 |
) |
||
Derivative gain (loss) |
35,116 |
|
|
(2,059 |
) |
||
Gain on legal settlement |
120 |
|
|
6,779 |
|
||
Other |
474 |
|
|
(3,351 |
) |
||
Total other income (expense) |
22,902 |
|
|
(8,936 |
) |
||
Net income (loss) before income taxes |
6,246 |
|
|
(6,988 |
) |
||
Income tax expense |
57 |
|
|
24 |
|
||
Net income (loss) |
$ |
6,189 |
|
|
$ |
(7,012 |
) |
|
|
|
|
||||
Net income (loss) per common share: |
|
|
|
||||
Basic |
$ |
0.00 |
|
|
$ |
(0.01 |
) |
Diluted |
0.01 |
|
|
(0.01 |
) |
||
Weighted-average shares outstanding: |
|
|
|
||||
Basic |
1,450,380 |
|
|
1,263,372 |
|
||
Diluted |
1,640,442 |
|
|
1,263,372 |
|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
|
|
|
Three Months Ended |
||||||||
|
|
|
June 30, |
||||||||
|
|
|
2019 |
|
2018 |
||||||
Net income (loss) |
|
$ |
6,189 |
|
|
$ |
(7,012 |
) |
|||
|
|
|
|
|
|
||||||
|
Interest income and expense, net |
|
12,808 |
|
|
10,305 |
|
||||
|
Derivative loss (gain) |
|
(35,116 |
) |
|
2,059 |
|
||||
|
Income tax expense |
|
57 |
|
|
24 |
|
||||
|
Depreciation, amortization, and accretion |
|
23,852 |
|
|
22,616 |
|
||||
EBITDA |
|
7,790 |
|
|
27,992 |
|
|||||
|
|
|
|
|
|
||||||
|
Non-cash compensation |
|
1,700 |
|
|
1,749 |
|
||||
|
Foreign exchange and other |
|
(947 |
) |
|
3,290 |
|
||||
|
Debt modification third party fees |
|
378 |
|
|
— |
|
||||
|
Merger and litigation-related costs |
|
— |
|
|
5,427 |
|
||||
|
Revision to contract termination charge |
|
— |
|
|
(20,478 |
) |
||||
|
Gain on legal settlement |
|
(120 |
) |
|
(6,779 |
) |
||||
Adjusted EBITDA (1) |
|
$ |
8,801 |
|
|
$ |
11,201 |
|
|||
(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. |
||||||||||
SCHEDULE OF SELECTED OPERATING METRICS
(In thousands, except subscriber and ARPU data)
(Unaudited)
|
|
|
Three Months Ended |
||||||||||||||||
|
|
|
June 30, |
||||||||||||||||
|
|
|
2019 |
|
2018 |
||||||||||||||
|
|
|
Service |
|
Equipment |
|
Service |
|
Equipment |
||||||||||
Revenue |
|
|
|
|
|
|
|
|
|||||||||||
|
Duplex |
|
$ |
9,031 |
|
|
$ |
306 |
|
|
$ |
10,134 |
|
|
$ |
751 |
|
||
|
SPOT |
|
12,619 |
|
|
2,186 |
|
|
13,868 |
|
|
2,011 |
|
||||||
|
Commercial IoT |
|
4,353 |
|
|
1,972 |
|
|
3,216 |
|
|
2,878 |
|
||||||
|
IGO |
|
179 |
|
|
— |
|
|
216 |
|
|
— |
|
||||||
|
Other |
|
518 |
|
|
27 |
|
|
561 |
|
|
91 |
|
||||||
|
Total Revenue |
|
$ |
26,700 |
|
|
$ |
4,491 |
|
|
$ |
27,995 |
|
|
$ |
5,731 |
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Subscribers |
|
|
|
|
|
|
|
|
|||||||||||
|
Duplex |
|
58,654 |
|
|
|
|
67,456 |
|
|
|
||||||||
|
SPOT |
|
286,101 |
|
|
|
|
293,659 |
|
|
|
||||||||
|
Commercial IoT |
|
400,193 |
|
|
|
|
345,749 |
|
|
|
||||||||
|
IGO |
|
26,930 |
|
|
|
|
25,988 |
|
|
|
||||||||
|
Other |
|
929 |
|
|
|
|
1,112 |
|
|
|
||||||||
|
Total Average Subscribers |
|
772,807 |
|
|
|
|
733,964 |
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
ARPU (1) |
|
|
|
|
|
|
|
|
|||||||||||
|
Duplex |
|
$ |
51.32 |
|
|
|
|
$ |
50.08 |
|
|
|
||||||
|
SPOT |
|
14.70 |
|
|
|
|
15.74 |
|
|
|
||||||||
|
Commercial IoT |
|
3.63 |
|
|
|
|
3.10 |
|
|
|
||||||||
|
IGO |
|
2.22 |
|
|
|
|
2.77 |
|
|
|
||||||||
(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/20190809005082/en/
Source:
Investor Contact Information:
Marcy O'Leary
[email protected]