Globalstar, Inc. (OTCQB:GSAT) today announced its financial results
for the three-month and twelve-month periods ended December 31,
2013.
FOURTH QUARTER FINANCIAL REVIEW
Jay Monroe, Chairman and CEO of Globalstar, commented, "2013
represents a truly historic year for Globalstar and, after a
multi-year period marked by numerous difficulties and delays, this
year we were able to emerge with a fully operational
second-generation constellation, a materially improved balance
sheet and liquidity position, improved growth profile including
rapidly increasing Adjusted EBITDA and the initiation of an
important regulatory proceeding for our Terrestrial Low Power
Service ("TLPS"). I am proud of the Company's ability to navigate
through many issues during 2013 and to have successfully removed
many impediments. The Company is on a renewed path to prosperity
leveraging its unique set of assets and capabilities."
Revenue
Revenue was $21.0 million for the fourth quarter of 2013
compared to $19.1 million for the fourth quarter of 2012, an
increase of 10%, which was due to increases in both service revenue
and subscriber equipment revenue.
Service revenue was $16.8 million for the fourth quarter of 2013
compared to $15.3 million for the fourth quarter of 2012, an
increase of $1.5 million, or 10%. The primary driver of this
increase was growth in Duplex revenue, which increased $1.5
million, or 33%. The growth in Duplex service revenue was due to
improved network performance driving higher minutes of use, a 16%
increase in revenue-generating subscribers, and an almost 90%
increase in gross activations over the fourth quarter of 2012.
These factors drove a 35% increase in Duplex ARPU to $24.97. Fourth
quarter 2013 service revenue growth also reflected, to a lesser
extent, both SPOT and Simplex revenue growth, which increased 2%
and 13%, respectively. The increases in Duplex, SPOT and Simplex
service revenue were offset partially by decreases in other service
revenue. Other service revenue decreased to $1.1 million for the
fourth quarter of 2013 compared to $1.7 million for the fourth
quarter of 2012, a decrease of $0.6 million, or 33%. This decrease
was due to a decline in revenue generated from various non-core
operations, including a line of business in certain of our European
markets and third party revenue as we transition wholesale
subscribers back to our network.
Subscriber equipment sales revenue was $4.2 million in the
fourth quarter of 2013, an increase of 13% from the fourth quarter
of 2012. Consistent with trends the Company has experienced
throughout 2013, Duplex equipment sales revenue increased nearly
70%, or $0.6 million, from the fourth quarter of 2012, which was
due to recapturing MSS market share driven by new sales of our
Duplex GSP 1700 satellite phone and the SPOT Global Phone. SPOT
equipment sales revenue also increased 30%, or $0.3 million, due in
large part to the successful introduction of SPOT Gen 3™ at the end
of the third quarter 2013 and the SPOT Trace in November 2013.
Comparing the fourth quarter of 2013 to the same period in 2012,
Simplex equipment sales revenue decreased $0.5 million due to the
change in the mix of products sold during the respective
quarters.
Net Loss
Net loss increased during the fourth quarter of 2013 reflecting
the impact of substantial non-cash charges resulting from an
increase in the value of the Company's derivative instruments,
which was driven primarily from a 61% increase in the Company's
stock price during the fourth quarter of 2013. The Company reported
a net loss of $234.8 million for the fourth quarter of 2013
compared to $19.0 million for the fourth quarter of 2012. The
increased net loss was due also to several other non-cash items,
such as higher interest expense driven by decreases in the amount
of interest being capitalized and note conversion activity, as well
as higher depreciation expense as the Company placed additional
satellites into service during 2013.
Adjusted EBITDA
Adjusted EBITDA was $3.9 million for the fourth quarter of 2013
compared to $2.5 million in the fourth quarter of 2012, an increase
of 58%. This increase was due to a $1.9 million increase in revenue
offset by a $0.5 million increase in total operating expenses
(excluding EBITDA adjustments). The increase in operating expense
was due primarily to investments made for sales and marketing
initiatives, including expanding the Company's distribution network
and additional advertising spend associated with new product
launches.
OPERATIONAL AND REGULATORY UPDATE
Regulatory Reform for Terrestrial Spectrum Authority
- On November 1, 2013, the FCC voted unanimously to release
proposed rules that would permit Globalstar to provide low-power
terrestrial mobile broadband services over 22 MHz of spectrum,
including 11.5 MHz of Globalstar's licensed S‐band spectrum at
2483.5-2495 MHz, as well as the non-exclusive use of the adjacent
10.5 MHz of unlicensed spectrum at 2473‐2483.5 MHz. The comment
period ends May 5, 2014 following the February 24, 2014 publication
of the proposal in the Federal Register with reply comments due
June 4, 2014.
Product Developments
- In November 2013, Globalstar introduced SPOT Trace, a
consumer-focused anti-theft asset tracking device. SPOT Trace helps
ensure cars, motorcycles, boats, ATVs, snowmobiles and other
valuable assets are constantly monitored with a notification alert
system when improper movement is detected.
- In January 2014, Globalstar announced Sat-Fi, a revolutionary
new technology that the Company intends to bring to market during
the second quarter of 2014. Sat-Fi will permit customers to use
their existing smartphones and other Wi-Fi enabled devices to
communicate over Globalstar's satellite system.
- In February 2014, Globalstar announced STX3, a Simplex
satellite global transmitter featuring the world's lowest
power-consuming technology for global M2M solutions.
2013 FINANCIAL REVIEW
Revenue increased to $82.7 million during 2013 compared to $76.3
million for 2012. Service revenue for 2013 increased 12% to $64.6
million compared to $57.5 million in 2012 while equipment sales
revenue decreased slightly to $18.1 million from $18.9 million in
2012. Net loss increased to $591.1 million compared to $112.2
million in 2012 due primarily to non-cash items, including an
increase in the value of the Company's derivative instruments,
which was driven by the more than 400% increase in the Company's
stock price during 2013, and other non-cash debt transactions,
including the recognition of non-cash losses on extinguishment of
debt resulting from transactions executed in connection with the
refinancing of its 5.75% Notes in May 2013 and the Amended and
Restated Loan Agreement with Thermo in July 2013. Net loss also
increased during 2013 due to other non-cash items, including
primarily higher interest and depreciation expense. Adjusted EBITDA
during 2013 increased 21% to $11.9 million from $9.8 million in
2012. This improvement was due to growth in service revenue, offset
partially by increases in operating costs due primarily to
strategic investments in the Company's sales and marketing
initiatives and in its gateway infrastructure.
Mr. Monroe concluded, "Globalstar is well positioned in the
evolving world of communications with a restored global
constellation, new product suite and an ongoing TLPS regulatory
process which will provide the nation with an incremental 22 MHz of
terrestrial spectrum for broadband services. TLPS offers a
controlled, managed terrestrial service with superior throughput
and quality of service characteristics without the limitations of
highly compromised public Wi-Fi channels. We look forward to
significant operating growth in our Duplex, SPOT and Simplex
business lines and to clearing the important milestones of our
process before the FCC."
CONFERENCE CALL
The Company will conduct an investor conference call today at
5:00 p.m. EDT to discuss fourth quarter 2013 financial results.
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Details are as
follows: |
Conference Call: |
5:00 p.m. EDT |
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Investors and the media are encouraged to
listen to the call through the Investor Relations section of the
Company's website at www.globalstar.com/investors. |
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If you would like to participate in the live
question and answer session following the Company's conference
call, please dial 1 (800) 708-4540 (US and Canada), 1 (847)
619-6397 (International) and use the participant pass code
36721314. |
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Audio
Replay: |
A replay of the earnings call will be
available for a limited time and can be heard after 7:30 p.m. EDT
on March 10, 2014. Dial: 1 (888) 843-7419 (US and Canada), 1 (630)
652-3042 (International) and pass code 3672 1314# |
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About Globalstar, Inc.
Globalstar provides mobile satellite voice and data services.
Globalstar offers these services to commercial customers and
recreational consumers in more than 120 countries around the world.
The Company's products include mobile and fixed satellite
telephones, simplex and duplex satellite data modems, flexible
airtime service packages and the SPOT family of mobile satellite
consumer products including the SPOT Satellite GPS Messenger. Many
land based and maritime industries benefit from Globalstar with
increased productivity from remote areas beyond cellular and
landline service. Global customer segments include: oil and gas,
government, mining, forestry, commercial fishing, utilities,
military, transportation, heavy construction, emergency
preparedness, and business continuity as well as individual
recreational users. Globalstar data solutions are ideal for various
asset and personal tracking, data monitoring and SCADA
applications. 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 regarding Globalstar, please visit
Globalstar's web site at 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 actions by the FCC, 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
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 |
(Dollars in thousands, except
per share data) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Twelve Months
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
Revenue: |
|
|
|
|
Service revenues |
$ 16,789 |
$ 15,323 |
$ 64,644 |
$ 57,468 |
Subscriber equipment sales |
4,205 |
3,739 |
18,067 |
18,850 |
Total revenue |
20,994 |
19,062 |
82,711 |
76,318 |
Operating expenses: |
|
|
|
|
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below) |
7,297 |
7,853 |
30,210 |
30,071 |
Cost of subscriber equipment
sales |
2,948 |
2,816 |
13,623 |
13,280 |
Cost of subscriber equipment
sales - reduction in the value of inventory |
5,794 |
439 |
5,794 |
1,397 |
Marketing, general, and
administrative |
7,308 |
6,434 |
29,888 |
27,496 |
Reduction in the value of
long-lived assets |
-- |
-- |
-- |
7,218 |
Contract termination
charge |
-- |
-- |
-- |
22,048 |
Depreciation, amortization, and
accretion |
24,478 |
20,524 |
90,592 |
69,801 |
Total operating expenses |
47,825 |
38,066 |
170,107 |
171,311 |
Loss from operations |
(26,831) |
(19,004) |
(87,396) |
(94,993) |
Other expense: |
|
|
|
|
Gain (loss) on extinguishment
of debt |
1,717 |
-- |
(109,092) |
-- |
Loss on equity issuance |
-- |
-- |
(16,701) |
-- |
Interest income and expense,
net of amounts capitalized |
(27,959) |
(8,090) |
(67,828) |
(21,486) |
Derivative gain (loss) |
(179,087) |
9,535 |
(305,999) |
6,974 |
Other |
(1,839) |
(1,341) |
(2,962) |
(2,280) |
Total other income
(expense) |
(207,168) |
104 |
(502,582) |
(16,792) |
Loss before income taxes |
(233,999) |
(18,900) |
(589,978) |
(111,785) |
Income tax expense |
798 |
52 |
1,138 |
413 |
Net loss |
$ (234,797) |
$ (18,952) |
$ (591,116) |
$ (112,198) |
|
|
|
|
|
Loss per common share: |
|
|
|
|
Basic |
$ (0.36) |
$ (0.05) |
$ (0.96) |
$ (0.29) |
Diluted |
(0.36) |
(0.05) |
(0.96) |
(0.29) |
|
|
|
|
|
Weighted-average shares outstanding |
|
|
|
|
Basic |
779,483 |
424,180 |
614,959 |
388,453 |
Diluted |
779,483 |
424,180 |
614,959 |
388,453 |
|
GLOBALSTAR,
INC. |
RECONCILIATION OF GAAP
NET LOSS TO ADJUSTED EBITDA |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Twelve Months
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Net loss |
$ (234,797) |
$ (18,952) |
$ (591,116) |
$ (112,198) |
|
|
|
|
|
Interest income and expense,
net |
27,959 |
8,090 |
67,828 |
21,486 |
Derivative (gain) loss |
179,087 |
(9,535) |
305,999 |
(6,974) |
Income tax expense |
798 |
52 |
1,138 |
413 |
Depreciation, amortization, and
accretion |
24,478 |
20,524 |
90,592 |
69,801 |
EBITDA |
(2,475) |
179 |
(125,559) |
(27,472) |
|
|
|
|
|
Reduction in the value of
long-lived assets and inventory |
5,794 |
439 |
5,794 |
8,615 |
Non-cash compensation |
403 |
341 |
2,282 |
1,322 |
Research and development |
98 |
120 |
572 |
336 |
Severance |
-- |
5 |
5 |
51 |
Foreign exchange and other |
1,839 |
1,341 |
2,962 |
2,280 |
Thales arbitration
expenses |
-- |
72 |
-- |
1,803 |
Contract termination
charge |
-- |
-- |
-- |
22,048 |
Gain (loss) on extinguishment
of debt |
(1,717) |
-- |
109,092 |
-- |
Loss on equity issuance |
-- |
-- |
16,702 |
-- |
Write off of deferred financing
costs |
-- |
-- |
-- |
833 |
Adjusted EBITDA (1) |
$ 3,942 |
$ 2,497 |
$ 11,850 |
$ 9,816 |
(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, R&D costs associated with the development of
new products, and certain other significant charges. 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 a 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.
GLOBALSTAR,
INC. |
SCHEDULE OF SELECTED
OPERATING METRICS |
(Dollars in thousands, except
subscriber and ARPU data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31, |
Twelve Months
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
Service |
Equipment |
Service |
Equipment |
Service |
Equipment |
Service |
Equipment |
Revenue |
|
|
|
|
|
|
|
|
Duplex |
$ 6,345 |
$ 1,409 |
$ 4,755 |
$ 836 |
$ 22,788 |
$ 6,565 |
$ 18,438 |
$ 3,447 |
SPOT |
6,994 |
1,465 |
6,868 |
1,128 |
27,902 |
4,546 |
25,227 |
5,196 |
Simplex |
2,023 |
1,176 |
1,792 |
1,630 |
7,619 |
5,927 |
6,146 |
9,081 |
IGO |
290 |
176 |
223 |
119 |
1,029 |
841 |
804 |
990 |
Other |
1,137 |
(21) |
1,685 |
26 |
5,306 |
188 |
6,853 |
136 |
|
$ 16,789 |
$ 4,205 |
$ 15,323 |
$ 3,739 |
$ 64,644 |
$ 18,067 |
$ 57,468 |
$ 18,850 |
|
|
|
|
|
|
|
|
|
Average
Subscribers |
|
|
|
|
|
|
|
Duplex |
84,691 |
|
85,734 |
|
84,247 |
|
88,189 |
|
SPOT (2) |
221,129 |
|
238,487 |
|
231,488 |
|
221,911 |
|
Simplex |
224,504 |
|
185,137 |
|
209,756 |
|
164,459 |
|
IGO |
39,456 |
|
41,128 |
|
40,249 |
|
42,252 |
|
|
|
|
|
|
|
|
|
|
ARPU (1) |
|
|
|
|
|
|
|
|
Duplex |
$ 24.97 |
|
$ 18.49 |
|
$ 22.54 |
|
$ 17.42 |
|
SPOT (2) |
10.54 |
|
9.60 |
|
10.04 |
|
9.47 |
|
Simplex |
3.00 |
|
3.23 |
|
3.03 |
|
3.11 |
|
IGO |
2.45 |
|
1.81 |
|
2.13 |
|
1.59 |
|
(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 income. 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) Beginning in 2013, Globalstar initiated a process to
deactivate certain suspended subscribers in its SPOT subscriber
base. During the first quarter of 2013, approximately 36,000
subscribers were deactivated.
CONTACT: Investor contact information:
Email
investorrelations@globalstar.com
Phone
(985) 335-1538
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