COVINGTON, La., Nov. 03, 2016 (GLOBE NEWSWIRE) -- Globalstar, Inc. (NYSE MKT:GSAT) today announced its financial results for the
quarter ended September 30, 2016.
Jay Monroe, Chairman and CEO of Globalstar, commented, “Total revenue increased 8% during the third quarter as we
continue to grow our subscriber base and improve ARPU. Service revenue, up 12% from the third quarter of 2015, contributed
meaningfully to the improvement in our operating margin. Net income decreased from the third quarter of 2015 due to lower non-cash
derivative valuation gains, but Adjusted EBITDA improved significantly due to increased service revenue as our costs were down
slightly. On the business development front, we were pleased to announce the execution of a strategic partnership with Carmanah
Technologies Corporation, whereby Carmanah will design and manufacture a new solar powered M2M satellite product and use our
satellite constellation for remote connectivity of Carmanah products. We are pursuing additional opportunities for this type of
innovation and believe Globalstar is well positioned to provide reliable connectivity as IoT and satellite technology converge.
Finally, we continue to work on our FCC proceeding every day to seek a favorable outcome. As we have previously stated, given the
current status of our proceeding and in deference to the Commission’s deliberative process, we will not provide additional comment
on that subject at this time."
THIRD QUARTER FINANCIAL REVIEW
Revenue
Total revenue for the third quarter of 2016 increased by $1.9 million, or 8%, from the third quarter of 2015. This
increase was driven primarily by higher service revenue resulting from growth in our average subscriber base and increased ARPU.
This increase in service revenue was offset partially by a decrease in revenue generated from equipment sales due primarily to
fewer core Simplex units being sold during the three months ended September 30, 2016.
Service revenue increased $2.3 million, or 12%, in the third quarter of 2016 compared to the third quarter of 2015.
This increase was driven primarily by growth in SPOT and Duplex service revenue, which increased $0.9 million and $1.9 million,
respectively. Higher ARPU and average subscribers propelled this growth. The 26% increase in Duplex service revenue from the third
quarter of 2015 was driven primarily by a 22% increase in ARPU. Higher ARPU was due primarily to increased revenue from annual,
usage-based plans because a greater proportion of our new subscribers select these more valuable plans. These annual, usage-based
plans result in higher service revenue recognized in seasonally stronger months. Partially offsetting the increases in SPOT and
Duplex service revenue was a slight decrease in Simplex service revenue and a $0.4 million decrease in other service revenue.
Subscriber equipment sales revenue was down $0.4 million, or 11%, from $4.0 million in the third quarter of 2015 to
$3.6 million in the third quarter of 2016 due primarily to a $0.4 million decrease in Simplex equipment sales revenue. This
decrease was due to a decline in the number of units sold reflecting the downturn in the oil and gas industry, which has negatively
impacted our business due to the concentration of Simplex customers who operate in this industry.
Loss from Operations
Loss from operations decreased $1.3 million, or 8%, from $16.1 million in the third quarter of 2015 to $14.8
million in the third quarter of 2016 due primarily to a $1.9 million increase in total revenue (for the reasons discussed above),
offset partially by a $0.5 million, or 1%, increase in operating expenses.
Net Income (Loss)
Net income (loss) decreased $26.7 million from net income of $24.1 million in the third quarter of 2015 to net loss
of $2.6 million in the third quarter of 2016. The primary reason for this decrease was lower non-cash derivative gains, which
decreased $43.2 million due predominantly to changes in certain valuation inputs, including discount rate, stock price volatility
and remaining estimated term of the instruments. This decrease was offset partially by higher revenue and changes in non-cash
items, including a $7.2 million fluctuation in the gain (loss) on equity issuance and a $6.4 million change in income tax expense
(benefit).
Adjusted EBITDA
Adjusted EBITDA increased 48% during the third quarter of 2016 driven primarily by a $2.3 million, or 12%, increase
in high margin service revenue, offset partially by a $0.4 million decrease in revenue generated from equipment sales. Operating
expenses (excluding EBITDA adjustments) were down slightly over the same period.
CONFERENCE CALL
The Company will conduct an investor conference call on November 3, 2016 at 5:00 p.m. ET to discuss its third
quarter 2016 financial results.
| Details are as follows: |
| Conference Call: |
5:00 p.m. ET
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
(888) 771-4371 (US and Canada), 1 (847) 585-4405 (International) and use the participant pass code 43443951.
|
| Audio Replay: |
A replay of the earnings call will be
available for a limited time and can be heard after 7:30 p.m. ET on November 3, 2016. Dial: 1 (888) 843-7419 (US and Canada), 1
(630) 652-3042 (International) and pass code 4344 3951#. |
About Globalstar, Inc.
Globalstar is a leading provider of mobile satellite voice and data services, leveraging the world’s newest mobile satellite
communications network. Customers around the world in industries such as government, emergency management, marine, logging, oil &
gas and outdoor recreation rely on Globalstar to conduct business smarter and faster, maintain peace of mind and access emergency
personnel. Globalstar data solutions are ideal for various asset and personal tracking, data monitoring, SCADA and IoT
applications. The Company's products include mobile and fixed satellite telephones, the innovative Sat-Fi satellite hotspot,
Simplex and Duplex satellite data modems, tracking devices and flexible service packages.
Note that all SPOT products described in this press release are the products of SPOT LLC, a subsidiary of
Globalstar, which is not affiliated in any manner with Spot Image of Toulouse, France or Spot Image Corporation of Chantilly,
Virginia.
For more information, visit 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 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
September 30, |
| |
2016 |
|
2015 |
| Revenue: |
|
|
|
| Service revenues |
$ |
21,952 |
|
|
$ |
19,644 |
|
| Subscriber equipment sales |
3,592 |
|
|
4,034 |
|
| Total revenue |
25,544 |
|
|
23,678 |
|
| Operating expenses: |
|
|
|
| Cost of services (exclusive of depreciation, amortization, and accretion shown separately
below) |
8,373 |
|
|
7,761 |
|
| Cost of subscriber equipment sales |
2,411 |
|
|
2,914 |
|
| Marketing, general and administrative |
10,077 |
|
|
9,675 |
|
| Depreciation, amortization, and accretion |
19,446 |
|
|
19,417 |
|
| Total operating expenses |
40,307 |
|
|
39,767 |
|
| Loss from operations |
(14,763 |
) |
|
(16,089 |
) |
| Other income (expense): |
|
|
|
| Gain (loss) on equity issuance |
4,272 |
|
|
(2,920 |
) |
| Interest income and expense, net of amounts capitalized |
(8,866 |
) |
|
(9,019 |
) |
| Derivative gain |
10,982 |
|
|
54,194 |
|
| Other |
(505 |
) |
|
(1,953 |
) |
| Total other income (expense) |
5,883 |
|
|
40,302 |
|
| Income (loss) before income taxes |
(8,880 |
) |
|
24,213 |
|
| Income tax expense (benefit) |
(6,303 |
) |
|
115 |
|
| Net income (loss) |
$ |
(2,577 |
) |
|
$ |
24,098 |
|
| |
|
|
|
| Net income (loss) per common share: |
|
|
|
| Basic |
$ |
— |
|
|
$ |
0.02 |
|
| Diluted |
— |
|
|
0.02 |
|
| Weighted-average shares outstanding: |
|
|
|
| Basic |
1,080,313 |
|
|
1,031,398 |
|
| Diluted |
1,080,313 |
|
|
1,234,551 |
|
| |
|
|
|
|
|
| GLOBALSTAR, INC. |
| RECONCILIATION OF GAAP NET INCOME (LOSS) TO
NON-GAAP ADJUSTED EBITDA |
| (In thousands) |
| (Unaudited) |
| |
| |
|
|
Three Months Ended |
| |
|
|
September
30, |
| |
|
|
2016 |
|
2015 |
| Net income (loss) |
|
$ |
(2,577 |
) |
|
$ |
24,098 |
|
| |
|
|
|
|
|
| |
Interest income and expense, net |
|
8,866 |
|
|
9,019 |
|
| |
Derivative gain |
|
(10,982 |
) |
|
(54,194 |
) |
| |
Income tax expense (benefit) |
|
(6,303 |
) |
|
115 |
|
| |
Depreciation, amortization, and accretion |
|
19,446 |
|
|
19,417 |
|
| EBITDA |
|
8,450 |
|
|
(1,545 |
) |
| |
|
|
|
|
|
| |
Non-cash compensation |
|
1,242 |
|
|
662 |
|
| |
Foreign exchange and other |
|
505 |
|
|
1,953 |
|
| |
(Gain) loss on equity issuance |
|
(4,272 |
) |
|
2,920 |
|
| Adjusted EBITDA (1) |
|
$ |
5,925 |
|
|
$ |
3,990 |
|
| (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 significant 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. In light of recent SEC guidance on the use of non-GAAP measures, the Company has recast Adjusted
EBITDA in current and prior periods.
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 |
| (In thousands, except subscriber and ARPU data) |
| (Unaudited) |
| |
| |
|
|
Three Months Ended |
| |
|
|
September
30, |
| |
|
|
2016 |
|
2015 |
| |
|
|
Service |
Equipment |
|
Service |
Equipment |
| Revenue |
|
|
|
|
|
|
| |
Duplex |
|
$ |
9,303 |
|
$ |
1,125 |
|
|
$ |
7,409 |
|
$ |
1,122 |
|
| |
SPOT |
|
9,662 |
|
1,436 |
|
|
8,794 |
|
1,414 |
|
| |
Simplex |
|
2,294 |
|
832 |
|
|
2,363 |
|
1,265 |
|
| |
IGO |
|
238 |
|
175 |
|
|
189 |
|
272 |
|
| |
Other |
|
455 |
|
24 |
|
|
889 |
|
(39 |
) |
| |
|
|
$ |
21,952 |
|
$ |
3,592 |
|
|
$ |
19,644 |
|
$ |
4,034 |
|
| |
|
|
|
|
|
|
|
| Average Subscribers |
|
|
|
|
|
|
| |
Duplex |
|
77,485 |
|
|
|
75,303 |
|
|
| |
SPOT |
|
276,384 |
|
|
|
258,812 |
|
|
| |
Simplex |
|
298,186 |
|
|
|
302,460 |
|
|
| |
IGO |
|
39,318 |
|
|
|
38,725 |
|
|
| |
|
|
|
|
|
|
|
| ARPU (1) |
|
|
|
|
|
|
| |
Duplex |
|
$ |
40.02 |
|
|
|
$ |
32.80 |
|
|
| |
SPOT |
|
11.65 |
|
|
|
11.33 |
|
|
| |
Simplex |
|
2.56 |
|
|
|
2.60 |
|
|
| |
IGO |
|
2.02 |
|
|
|
1.63 |
|
|
| (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.
|
Investor contact information: investorrelations@globalstar.com
