Globalstar Announces Second Quarter 2021 Results
Globalstar (NYSE: GSAT) reported its Q2 2021 financial results, showing a slight decline in total revenue compared to Q2 2020, with service revenue affected by fewer Duplex subscribers. Notably, SPOT activations increased by 33%, and commercial IoT equipment sales doubled, indicating future service revenue potential. The company has reduced its net first lien debt to under $50 million and achieved a net loss of $16 million, slightly higher than the previous year. Despite challenges, including a decrease in ARPU, Globalstar remains optimistic about new opportunities in the Commercial IoT space.
- SPOT activations increased by 33%, indicating strong subscriber growth.
- Commercial IoT equipment sales more than doubled, signaling future revenue potential.
- Net first lien debt reduced to under $50 million, improving financial stability.
- Adjusted EBITDA remained consistent at $9.8 million, reflecting stable operational performance.
- Total revenue decreased slightly compared to the prior year.
- Service revenue declined due to fewer Duplex subscribers and lower ARPU.
- Loss from operations increased to $16 million, reflecting higher operating expenses.
Globalstar, Inc. (NYSE American: GSAT) today announced its operating and financial results for the quarter ended June 30, 2021.
Dave Kagan, Chief Executive Officer of Globalstar, commented, “We are pleased with the improvement of several key performance indicators during the second quarter, including a significant increase in SPOT and Commercial IoT equipment sales, which is a leading indicator of future subscriber activations and service revenue growth. SPOT activations continue at record levels with LTM gross activations up
Kagan continued, "Many people in our organization are focused on the blocking and tackling associated with supporting our existing VAR relationships, progressing our product development efforts, and developing our next generation of network assets. These fundamental roles are critical to our success and they have been hitting on all cylinders. However, what will be essential to our ability to meaningfully capitalize on the vast opportunities available to us, particularly in the Commercial IoT space, is identifying, pursuing and closing large deals. One such opportunity in particular is remote monitoring in the alternative energy industry, which has progressed over the last few months with successful field testing. While this opportunity isn't yet secured, deployments such as this one will expand the use cases and industries that our products can support, which would further reduce the oil and gas concentration that contributed to lower demand during 2020 and provide a more diverse revenue base.
"We also continue to reduce leverage, and I am happy to report that we have less than
Jay Monroe, Executive Chairman of Globalstar, commented, “Dave and his team are executing on the plan to transition the satellite business to an internet of things focused service and I am confident that the new products in the pipeline will meet the evolution of the IoT space beyond the reach of cellular. The spectrum opportunity is also progressing very rapidly, and its potential gets clearer to us every quarter. While Nokia, Airspan and XCom continue to pursue Band 53 opportunities, we have added to the growing list of Band 53 supporters to now include a large global systems integrator. We have deployed our first revenue producing private network in Africa at a large mining complex and have made promising inroads with several large potential partners across the continent while continuing to execute on opportunities in the western hemisphere."
Monroe concluded, "Lastly, the international regulatory effort continues across four continents and we expect to announce additional regulatory wins that will take us to over one billion people covered by Band 53 authorities. This is a very nice time to be at Globalstar with the capital structure greatly improved and the realization of our long held strategy closer and closer to our grasp."
FINANCIAL REVIEW
Revenue
Total Revenue
Total revenue for the second quarter of 2021 decreased slightly from the second quarter of 2020. Higher revenue generated from subscriber equipment sales was offset by lower service revenue.
Service Revenue
Service revenue decreased over the prior year's quarter due primarily to fewer Duplex subscribers. While the decline in Duplex subscribers is expected to continue as we focus our resources on other revenue streams, we continue to see consistent subscriber activations and recurring service revenue; however, these activations are limited by the amount of devices available for sale.
Conversely, SPOT activations were up
Finally, service revenue generated from Commercial IoT subscribers increased
Subscriber Equipment Sales
Subscriber equipment sales increased
Regarding the supply chain shortage impacting a variety of industries, we are actively managing this situation. We are ordering material in higher volumes and at higher costs than historically done, but believe that our production quantities will be sufficient to meet our sales demand. As this situation relates to sales margins, we negotiated a reduction in labor rates with our primary manufacturer in the third quarter of 2020. This cost reduction has offset the impact from higher component parts when comparing the first half of 2021 to the prior year period.
Loss from Operations
Loss from operations was
An increase in cost of services due to higher licensing fees for new software products was offset by a reduction in marketing, general and administrative (MG&A) expenses due to a favorable fluctuation in bad debt expense following the bad debt reserve and subsequent recovery of an individually significant customer balance.
Notably, cost of subscriber equipment sales was generally flat between periods despite a significant increase in equipment revenue. During the second quarter of 2021, we reversed an accrual for potential tariffs owed on imports from China made prior to a ruling by the U.S Customs and Border Protection in September 2019 that are no longer due, resulting in an expense reduction of
Net Loss
Net loss decreased
Adjusted EBITDA
Adjusted EBITDA was
Liquidity
As of June 30, 2021, we held cash and cash equivalents of
Our sources of cash also include operating cash flows generated from the business. We expect our uses of cash over the next twelve months to include operating costs, capital expenditures related primarily to network upgrades, and interest payments.
About Globalstar, Inc.
Globalstar is a leading provider of customizable Satellite IoT Solutions for customers around the world in industries such as oil and gas, transportation, emergency management, government, maritime and outdoor recreation. A pioneer of mobile satellite voice and data services, Globalstar solutions connect people to their devices and allow businesses to streamline operations providing safety and communication and enabling mobile assets to be monitored remotely via the Globalstar Satellite Network. The Company's Commercial IoT product portfolio includes industry-acclaimed SmartOne asset tracking products, Commercial IoT satellite transmitters and the SPOT® product line for personal safety, messaging and emergency response, all supported on SPOT My Globalstar, a robust cloud-based enhanced mapping solution. Learn more at Globalstar.com.
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.
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 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 |
|||||||
(In thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
June 30, |
||||||
|
2021 |
|
2020 |
||||
Revenue: |
|
|
|
||||
Service revenue |
$ |
25,617 |
|
|
$ |
27,090 |
|
Subscriber equipment sales |
4,662 |
|
|
3,274 |
|
||
Total revenue |
30,279 |
|
|
30,364 |
|
||
Operating expenses: |
|
|
|
||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) |
9,123 |
|
|
8,647 |
|
||
Cost of subscriber equipment sales |
2,858 |
|
|
2,940 |
|
||
Cost of subscriber equipment sales - reduction in the value of inventory |
782 |
|
|
— |
|
||
Marketing, general and administrative |
9,681 |
|
|
10,253 |
|
||
Depreciation, amortization, and accretion |
23,843 |
|
|
23,903 |
|
||
Total operating expenses |
46,287 |
|
|
45,743 |
|
||
Loss from operations |
(16,008 |
) |
|
(15,379 |
) |
||
Other (expense) income: |
|
|
|
||||
Loss on extinguishment of debt |
2,664 |
|
|
— |
|
||
Interest income and expense, net of amounts capitalized |
(10,778 |
) |
|
(11,508 |
) |
||
Derivative (loss) gain |
(1,310 |
) |
|
1,160 |
|
||
Foreign currency gain |
4,425 |
|
|
1,314 |
|
||
Other |
(88 |
) |
|
(233 |
) |
||
Total other (expense) income |
(5,087 |
) |
|
(9,267 |
) |
||
Loss before income taxes |
(21,095 |
) |
|
(24,646 |
) |
||
Income tax expense |
354 |
|
|
90 |
|
||
Net loss |
$ |
(21,449 |
) |
|
$ |
(24,736 |
) |
|
|
|
|
||||
Net loss per common share: |
|
|
|
||||
Basic |
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
Diluted |
(0.01 |
) |
|
(0.01 |
) |
||
Weighted-average shares outstanding: |
|
|
|
||||
Basic |
1,791,943 |
|
|
1,668,974 |
|
||
Diluted |
1,791,943 |
|
|
1,668,974 |
|
||
GLOBALSTAR, INC. |
|||||||
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
June 30, |
||||||
|
2021 |
|
2020 |
||||
Net loss |
$ |
(21,449 |
) |
|
$ |
(24,736 |
) |
|
|
|
|
||||
Interest income and expense, net |
10,778 |
|
|
11,508 |
|
||
Derivative loss (gain) |
1,310 |
|
|
(1,160 |
) |
||
Income tax expense |
354 |
|
|
90 |
|
||
Depreciation, amortization, and accretion |
23,843 |
|
|
23,903 |
|
||
EBITDA |
14,836 |
|
|
9,605 |
|
||
|
|
|
|
||||
Non-cash compensation |
1,143 |
|
|
1,263 |
|
||
Reduction in the value of inventory |
782 |
|
|
— |
|
||
Foreign exchange and other |
(4,337 |
) |
|
(1,081 |
) |
||
Adjusted EBITDA (1) |
$ |
9,760 |
|
|
$ |
9,787 |
|
(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 and inventory, 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. |
|||||||||||
SCHEDULE OF SELECTED OPERATING METRICS |
|||||||||||
(In thousands, except subscriber and ARPU data) |
|||||||||||
(Unaudited) |
|||||||||||
|
Three Months Ended |
||||||||||
|
June 30, |
||||||||||
|
2021 |
|
2020 |
||||||||
|
Service |
|
Equipment |
|
Service |
|
Equipment |
||||
Revenue |
|
|
|
|
|
|
|
||||
Duplex |
$ |
7,243 |
|
$ |
331 |
|
$ |
8,556 |
|
$ |
625 |
SPOT |
11,139 |
|
2,230 |
|
11,579 |
|
1,695 |
||||
Commercial IoT |
4,504 |
|
2,090 |
|
4,298 |
|
939 |
||||
Engineering and other |
2,731 |
|
11 |
|
2,657 |
|
15 |
||||
Total revenue |
$ |
25,617 |
|
$ |
4,662 |
|
$ |
27,090 |
|
$ |
3,274 |
|
|
|
|
|
|
|
|
||||
Average subscribers |
|
|
|
|
|
|
|
||||
Duplex |
44,160 |
|
|
|
50,491 |
|
|
||||
SPOT |
264,508 |
|
|
|
264,395 |
|
|
||||
Commercial IoT |
409,346 |
|
|
|
415,004 |
|
|
||||
Other |
27,603 |
|
|
|
27,342 |
|
|
||||
Total average subscribers |
745,617 |
|
|
|
757,232 |
|
|
||||
|
|
|
|
|
|
|
|
||||
ARPU (1) |
|
|
|
|
|
|
|
||||
Duplex |
$ |
54.67 |
|
|
|
$ |
56.49 |
|
|
||
SPOT |
14.04 |
|
|
|
14.60 |
|
|
||||
Commercial IoT |
3.67 |
|
|
|
3.45 |
|
|
||||
(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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FAQ
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