- Total third quarter 2013 revenue was $22.5 million compared to
$20.5 million in 2012, an increase of 10%; service revenue
increased 11% with equipment revenue increasing 6%
- Duplex ARPU increased 29% to $24.50 during third quarter of
2013 compared to the third quarter of 2012; Duplex equipment
revenue increased over 80% during the same comparable periods
- Simplex and SPOT service revenue increased by 27% and 6%,
respectively, during the third quarter of 2013 from the third
quarter in 2012
- COFACE senior debt facility agreement successfully amended and
all events of default cured
- Second-generation constellation completely in service and
Duplex capabilities fully restored; minutes of use on the
Globalstar network increased 23% during the third quarter of 2013
compared to the third quarter in 2012
- On November 1, 2013, the Federal Communications Commission
("FCC") voted unanimously to release a Notice of Proposed
Rulemaking ("NPRM") for Globalstar's provision of low power mobile
broadband services over 22 MHz of spectrum
Globalstar, Inc. (OTCQB:GSAT) today announced its financial results
for the three-month period ended September 30, 2013.
THIRD QUARTER FINANCIAL REVIEW
Jay Monroe, Chairman and CEO of Globalstar, commented, "The
third quarter marked a momentous time for Globalstar as the Company
achieved milestones across our operating, financial and regulatory
efforts. In August, we placed the final satellite from our February
launch into service, completing the MSS industry's first
second-generation Low Earth Orbit ("LEO") constellation years ahead
of the competition. This event not only physically restores quality
Duplex service but also symbolizes our perseverance in the face of
great challenges over the past few years. We have experienced both
a material increase in network usage and the acquisition of a
growing number of new subscribers as the combination of restored
service and attractive pricing drives increased demand. The
introduction of the SPOT Global Phone helped total Duplex equipment
revenue grow 80%. We are succeeding in expanding MSS into the
nascent consumer market. Major Duplex data points including ARPU,
minutes of use, service revenue, equipment revenue and gross
subscriber additions are rebounding and provide strong evidence of
our future financial performance. The FCC's recent release of
proposed new rules permitting Globalstar to offer mobile broadband
services is the culmination of a nearly year-long effort that, once
concluded, should greatly enhance Globalstar's future profitability
while meaningfully increasing the nation's spectrum available for
terrestrial broadband service and reduce acute Wi-Fi congestion. We
look forward to working through the comment cycle in collaboration
with all stakeholders to obtain a favorable FCC order."
Revenue
Revenue was $22.5 million for the third quarter of 2013 compared
to $20.5 million for the third quarter of 2012, an increase of 10%,
which was due to increases in both service revenue and subscriber
equipment sales.
Service revenue was $17.1 million for the third quarter of 2013
compared to $15.4 million for the third quarter of 2012, an
increase of $1.7 million, or 11%. The primary driver of this
increase was growth in Duplex revenue, which increased $1.2
million, or 25%. The growth in Duplex service revenue was due
primarily to higher usage, an increase in revenue-generating
subscribers and the continued migration of subscribers to higher
rate plans that reflect improved network performance. These factors
drove a 29% increase in Duplex ARPU to $24.50. Third quarter 2013
service revenue growth also reflected SPOT revenue growth, which
increased 6% as revenue-generating subscribers increased. SPOT ARPU
increased 13% to $10.64 due in part to deactivations of non-revenue
generating subscribers beginning in the first quarter of 2013. As
previously announced, the Company initiated a process to deactivate
certain suspended (non-paying) subscribers in its subscriber base
beginning in 2013; approximately 36,000 subscribers were
deactivated during the first quarter. If suspended subscribers were
excluded from the 2012 subscriber count, average subscribers for
the third quarter of 2013 would have increased by 8%. Simplex
service revenue increased 27% due to a 24% increase in the average
subscriber base. These increases were offset slightly by a decrease
in other service revenue of $0.5 million due primarily to the
timing and amount of service revenue recognized from engineering
contracts in the third quarter of 2013 compared to the third
quarter of 2012.
Subscriber equipment revenue was $5.5 million in the third
quarter of 2013, an increase of 6% from the third quarter of 2012.
Duplex equipment revenue increased 80% from the third quarter of
2012 which was driven by the success of SPOT Global Phone sales.
Comparing the third quarter of 2013 to the same period in 2012,
Simplex equipment sales decreased $0.6 million and SPOT equipment
sales decreased $0.1 million. Simplex sales were impacted by the
change in the mix of products sold during the third quarter of 2013
compared to the third quarter of 2012. SPOT sales were impacted by
the delayed introduction of SPOT Gen 3™.
Net Loss
Net loss increased during the third quarter of 2013 reflecting
the substantial impact of multiple aggregating non-cash items
resulting from the Company's debt transactions and related
derivative instruments. The Company reported a net loss of $205.0
million for the third quarter of 2013 compared to $41.2 million for
the third quarter of 2012. Increased net loss was due primarily to
the impact of non-cash derivative losses driven by a significant
increase in the Company's stock price from June 30, 2013 to
September 30, 2013. The increased net loss was due also to the
recognition of a non-cash loss on extinguishment of debt of $63.6
million resulting from transactions executed in connection with the
Amended and Restated Loan Agreement with Thermo, which was
completed in July 2013 as a condition precedent to closing the
Amended and Restated COFACE Facility. Also contributing to the
increased net loss was higher interest expense as the amount of
interest being capitalized decreased and note conversion activity
increased, in addition to higher depreciation expense as the
Company placed additional satellites into service.
Adjusted EBITDA
Adjusted EBITDA was $2.5 million for the third quarter of 2013
compared to $3.1 million in the third quarter of 2012. This
decrease was due to an increase in total operating expenses of $2.6
million (excluding EBITDA adjustments) offset partially by an
increase in revenue of $2.0 million. The increase in operating
expenses was due to strategic investments made for sales and
marketing initiatives, including new product launches and the
expansion of the Company's distribution network, as well as
investments in its gateway infrastructure in anticipation of
increased Duplex demand.
FINANCING UPDATE
During the third quarter, Globalstar successfully completed the
amendment and restatement of its COFACE Facility Agreement. The
amended agreement provides for a material improvement to the debt
amortization schedule and covenant levels with a total deferral of
$235 million of principal payments through 2019.
OPERATIONAL AND REGULATORY UPDATE
Second-Generation Constellation
- As previously announced, all satellites launched on February 6,
2013 have been placed into service, successfully completing the
Company's second-generation constellation and fully restoring its
Duplex capabilities.
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 adjacent 10.5 MHz of unlicensed
spectrum at 2473‐2483.5 MHz. The comment period is 75 days
following the publication of the proposal in the Federal Register
with reply comments due 30 days thereafter.
Mr. Monroe concluded, "With both the refinancings and
constellation restoration now in the rear view mirror, we are fully
engaged in leveraging our restored duplex service capability to
re-acquire and retain high-value subscribers. We can now dedicate
100% of our operational focus to driving revenue by investing in
aggressive customer acquisition and retention strategies and
continuing to develop and launch exciting new products like the new
consumer asset tracking device, SPOT Trace™. And finally, let me
reiterate how pleased we are with the proposed new rules issued by
the FCC last week. These rules are extremely positive for our
future plans and hold enormous potential for both consumers and the
Company in the months and years ahead."
CONFERENCE CALL
The Company will conduct an investor conference call today at
5:00 p.m. EST to discuss third quarter 2013 financial results.
|
Details are as
follows: |
|
Conference Call: |
5:00 p.m. EST 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.
If you would like to participate in the live question and answer
session following the Company's conference call, please dial 1
(800) 446-2782 (US and Canada), 1 (847) 413-3235 (International)
and use the participant pass code 36024771. |
Audio Replay: |
A replay of the earnings call will be
available for a limited time and can be heard after 7:30 p.m. EST
on November 13, 2013. Dial: 1 (888) 843-7419 (US and Canada), 1
(630) 652-3042 (International) and pass code 3602 4771#. |
About Globalstar, Inc.
Globalstar is a leading provider of 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 September 30, |
|
2013 |
2012 |
Revenue: |
|
|
Service revenues |
$ 17,056 |
$ 15,368 |
Subscriber equipment sales |
5,493 |
5,169 |
Total revenue |
22,549 |
20,537 |
Operating expenses: |
|
|
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below) |
8,181 |
7,413 |
Cost of subscriber equipment sales |
4,148 |
4,040 |
Cost of subscriber equipment sales -
reduction in the value of inventory |
-- |
660 |
Marketing, general, and
administrative |
9,079 |
7,425 |
Depreciation, amortization, and
accretion |
23,715 |
18,654 |
Total operating expenses |
45,123 |
38,192 |
Loss from operations |
(22,574) |
(17,655) |
Other expense: |
|
|
Loss on extinguishment of debt |
(63,569) |
-- |
Loss on equity issuance |
(2,733) |
-- |
Interest income and expense, net of
amounts capitalized |
(16,901) |
(6,565) |
Derivative loss |
(97,534) |
(16,473) |
Other |
(1,540) |
(439) |
Total other expense |
(182,277) |
(23,477) |
Loss before income taxes |
(204,851) |
(41,132) |
Income tax expense |
118 |
56 |
Net loss |
$ (204,969) |
$ (41,188) |
|
|
|
Loss per common share: |
|
|
Basic |
$ (0.30) |
$ (0.10) |
Diluted |
(0.30) |
(0.10) |
|
|
|
Weighted-average shares outstanding |
|
|
Basic |
673,546 |
394,344 |
Diluted |
673,546 |
394,344 |
|
|
|
GLOBALSTAR,
INC. |
RECONCILIATION OF GAAP
NET LOSS TO ADJUSTED EBITDA |
(Dollars in thousands) |
(unaudited) |
|
|
|
|
Three Months
Ended September 30, |
|
2013 |
2012 |
|
|
|
Net loss |
$ (204,969) |
$ (41,188) |
|
|
|
Interest income and expense, net |
16,901 |
6,565 |
Derivative loss |
97,534 |
16,473 |
Income tax expense |
118 |
56 |
Depreciation, amortization, and
accretion |
23,715 |
18,654 |
EBITDA |
(66,701) |
560 |
|
|
|
Reduction in the value of long-lived
assets and inventory |
-- |
660 |
Non-cash compensation |
1,171 |
323 |
Research and development |
189 |
46 |
Foreign exchange and other |
1,541 |
421 |
Thales arbitration expenses |
-- |
224 |
Loss on extinguishment of debt |
63,569 |
-- |
Loss on equity issuance |
2,733 |
-- |
Write off of deferred financing
costs |
-- |
833 |
Adjusted EBITDA (1) |
$ 2,502 |
$ 3,067 |
|
|
|
(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 consumer 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 net income/(loss), revenues and
operating profit, to measure operating performance. |
|
|
|
|
|
GLOBALSTAR,
INC. |
SCHEDULE OF SELECTED
OPERATING METRICS |
(Dollars in thousands, except
subscriber and ARPU) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
|
2013 |
2012 |
|
Service |
Equipment |
Service |
Equipment |
Revenue |
|
|
|
|
Duplex |
$ 6,235 |
$ 2,124 |
$ 4,993 |
$ 1,176 |
SPOT |
6,969 |
1,217 |
6,552 |
1,314 |
Simplex |
2,147 |
1,856 |
1,690 |
2,429 |
IGO |
251 |
189 |
199 |
355 |
Other |
1,454 |
107 |
1,934 |
(105) |
|
$ 17,056 |
$ 5,493 |
$ 15,368 |
$ 5,169 |
|
|
|
|
|
Average Subscribers |
|
|
|
|
Duplex |
84,821 |
|
87,819 |
|
SPOT |
218,416 |
|
231,310 |
|
Simplex |
215,691 |
|
173,781 |
|
IGO |
39,859 |
|
41,576 |
|
|
|
|
|
|
ARPU (1) |
|
|
|
|
Duplex |
$ 24.50 |
|
$ 18.95 |
|
SPOT |
10.64 |
|
9.44 |
|
Simplex |
3.32 |
|
3.24 |
|
IGO |
2.10 |
|
1.60 |
|
|
|
|
|
|
(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 unit provides
useful information concerning the appeal of its rate plans and
service offerings and its performance in attracting and retaining
high value customers. |
|
|
|
|
CONTACT: Investor contact information:
Email
InvestorRelations@Globalstar.com
Phone
(985) 335-1538
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