Globalstar Announces Third Quarter 2022 Results
Globalstar, Inc. (NYSE: GSAT) reported a 15% increase in total revenue for Q3 2022, up $5 million from Q3 2021, driven by higher service revenue. Service revenue rose $5.5 million mainly from wholesale capacity, despite supply chain challenges impacting subscriber equipment sales. Loss from operations ballooned to $186.6 million due to a $174.5 million non-cash charge related to Duplex assets abandonment. Adjusted EBITDA improved by 35% year-over-year. Looking ahead, Globalstar anticipates 2023 revenue between $185 million and $230 million.
- Total revenue increased by 15% in Q3 2022, driven by higher service revenue.
- Adjusted EBITDA rose 35% year-over-year, reflecting operational improvements.
- Commercial IoT service revenue grew by 5% compared to Q3 2021.
- Gross activations increased by 24% in the last twelve months.
- Loss from operations was $186.6 million, largely due to a $174.5 million non-cash charge.
- Subscriber equipment sales decreased by $0.4 million due to supply chain disruptions.
- Net loss increased to $204.4 million for Q3 2022, compared to $30.9 million in Q3 2021.
"The third quarter of 2022 was transformational for
QUARTERLY FINANCIAL REVIEW
Total Revenue
Total revenue for the third quarter of 2022 increased
Service Revenue
Service revenue increased
Our subscriber driven service revenue was down slightly due to continued headwinds from supply chain challenges which have resulted in reduced equipment sales, and therefore subscriber activations, for many of our core products. Importantly, Commercial IoT, another strategic pillar, increased from the prior year's quarter.
Commercial IoT service revenue increased
Looking to legacy services, SPOT and Duplex service revenue decreased
Subscriber Equipment Sales
Subscriber equipment sales decreased
Commercial IoT equipment sales revenue increased almost
SPOT equipment sales revenue was down
Loss from Operations
Loss from operations was
Excluding the reductions in value of equipment and long-lived assets, loss from operations would have improved quarter over quarter due to an increase in revenue (discussed above) offset partially by an increase in operating expenses driven primarily by higher cost of services and management, general and administrative costs (MG&A).
Consistent with recent quarters, cost of services was higher due primarily to higher licensing and professional fees, which have been elevated to support the launch of a new ERP system and other information technology security and maintenance. Higher lease and related occupancy costs associated with gateway expansion efforts also contributed to the increase in cost of services. Higher personnel costs also contributed to the increase in cost of services quarter over quarter.
MG&A costs were higher during the third quarter of 2022 due primarily to non-cash stock-based compensation designed to retain key employees.
Net Loss
Net loss was
Adjusted EBITDA
Adjusted EBITDA was
YEAR TO DATE FINANCIAL REVIEW
Total Revenue
For the nine months ended
Net Loss
Similar to the third quarter variance, net loss for the nine months ended
Adjusted EBITDA
Adjusted EBITDA increased
Liquidity
As of
FINANCIAL OUTLOOK
We recently provided financial guidance for full-year 2023, excluding revenue from terrestrial spectrum opportunities. We reiterate this guidance today with anticipated results included below. We expect to update this guidance on an annual basis, or more frequently if determined necessary.
-
Total revenue in 2023 between
and$185 million $230 million -
Adjusted EBITDA margin of approximately
55% , up from36% during the nine months endedSeptember 30, 2022
We expect these financial metrics to continue to improve significantly by 2026, which is expected to be the first full year in which the new satellites are operational, with total revenue expected to increase by approximately
Investor Day
We will hold an Investor Day on
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
|
||||||
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
||||
Service revenue |
$ |
33,301 |
|
|
$ |
27,848 |
|
Subscriber equipment sales |
|
4,325 |
|
|
|
4,766 |
|
Total revenue |
|
37,626 |
|
|
|
32,614 |
|
Operating expenses: |
|
|
|
||||
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) |
|
11,294 |
|
|
|
9,648 |
|
Cost of subscriber equipment sales |
|
3,490 |
|
|
|
4,099 |
|
Cost of subscriber equipment sales - reduction in the value of inventory |
|
8,537 |
|
|
|
71 |
|
Marketing, general and administrative |
|
10,707 |
|
|
|
9,196 |
|
Reduction in the value of long-lived assets |
|
166,001 |
|
|
|
242 |
|
Depreciation, amortization, and accretion |
|
24,238 |
|
|
|
24,072 |
|
Total operating expenses |
|
224,267 |
|
|
|
47,328 |
|
Loss from operations |
|
(186,641 |
) |
|
|
(14,714 |
) |
Other (expense) income: |
|
|
|
||||
Loss on extinguishment of debt |
|
— |
|
|
|
(829 |
) |
Interest income and expense, net of amounts capitalized |
|
(7,583 |
) |
|
|
(11,406 |
) |
Derivative gain |
|
662 |
|
|
|
229 |
|
Foreign currency loss |
|
(9,406 |
) |
|
|
(4,752 |
) |
Pension settlement loss |
|
(1,501 |
) |
|
|
— |
|
Other |
|
(45 |
) |
|
|
473 |
|
Total other expense) income |
|
(17,873 |
) |
|
|
(16,285 |
) |
Loss before income taxes |
|
(204,514 |
) |
|
|
(30,999 |
) |
Income tax benefit |
|
(153 |
) |
|
|
(114 |
) |
Net loss |
$ |
(204,361 |
) |
|
$ |
(30,885 |
) |
|
|
|
|
||||
Net loss per common share: |
|
|
|
||||
Basic |
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
Diluted |
|
(0.11 |
) |
|
|
(0.02 |
) |
Weighted-average shares outstanding: |
|
|
|
||||
Basic |
|
1,800,504 |
|
|
|
1,793,144 |
|
Diluted |
|
1,800,504 |
|
|
|
1,793,144 |
|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA (In thousands) (Unaudited) |
|||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
|
2022 |
|
|
|
2021 |
|
Net loss |
|
$ |
(204,361 |
) |
|
$ |
(30,885 |
) |
|
|
|
|
|
|
|
||||
|
Interest income and expense, net |
|
|
7,583 |
|
|
|
11,406 |
|
|
Derivative gain |
|
|
(662 |
) |
|
|
(229 |
) |
|
Income tax benefit |
|
|
(153 |
) |
|
|
(114 |
) |
|
Depreciation, amortization, and accretion |
|
|
24,238 |
|
|
|
24,072 |
|
EBITDA |
|
|
(173,355 |
) |
|
|
4,250 |
|
|
|
|
|
|
|
|
||||
|
Non-cash compensation |
|
|
2,100 |
|
|
|
905 |
|
|
Foreign exchange and other |
|
|
9,451 |
|
|
|
4,279 |
|
|
Reduction in value of inventory and long-lived assets |
|
|
174,538 |
|
|
|
313 |
|
|
Non-cash settlement of pension plan |
|
|
1,501 |
|
|
|
— |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
829 |
|
Adjusted EBITDA (1) |
|
$ |
14,235 |
|
|
$ |
10,576 |
|
(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, forecign 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 |
||||||||||
|
|
|
|
||||||||||
|
|
|
2022 |
|
2021 |
||||||||
|
|
|
Service |
|
Equipment |
|
Service |
|
Equipment |
||||
Revenue |
|
|
|
|
|
|
|
|
|||||
|
Subscriber |
|
|
|
|
|
|
|
|
||||
|
Duplex |
|
$ |
9,021 |
|
$ |
15 |
|
$ |
9,632 |
|
$ |
265 |
|
SPOT |
|
|
11,753 |
|
|
1,558 |
|
|
11,873 |
|
|
2,619 |
|
Commercial IoT |
|
|
4,673 |
|
|
2,713 |
|
|
4,458 |
|
|
1,841 |
|
Wholesale capacity |
|
|
6,972 |
|
|
— |
|
|
1,301 |
|
|
— |
|
Engineering and other |
|
|
882 |
|
|
39 |
|
|
584 |
|
|
41 |
|
Total revenue |
|
$ |
33,301 |
|
$ |
4,325 |
|
$ |
27,848 |
|
$ |
4,766 |
|
|
|
|
|
|
|
|
|
|
||||
Average subscribers |
|
|
|
|
|
|
|
|
|||||
|
Duplex |
|
|
41,204 |
|
|
|
|
45,004 |
|
|
||
|
SPOT |
|
|
276,203 |
|
|
|
|
271,843 |
|
|
||
|
Commercial IoT |
|
|
444,397 |
|
|
|
|
410,630 |
|
|
||
|
Other |
|
|
428 |
|
|
|
|
26,848 |
|
|
||
|
Total average subscribers |
|
|
762,232 |
|
|
|
|
754,325 |
|
|
||
|
|
|
|
|
|
|
|
|
|
||||
ARPU (1) |
|
|
|
|
|
|
|
|
|||||
|
Duplex |
|
$ |
72.98 |
|
|
|
$ |
71.34 |
|
|
||
|
SPOT |
|
|
14.18 |
|
|
|
|
14.56 |
|
|
||
|
Commercial IoT |
|
|
3.51 |
|
|
|
|
3.62 |
|
|
(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/20221103006324/en/
investorrelations@globalstar.com
Source:
FAQ
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