Globalstar, Inc. (NYSE American: GSAT) today announced its
operating and financial results for the third quarter and year to
date period ended September 30, 2023.
"Globalstar continued to sustain its record growth this year,
with a significant improvement in profitability during the third
quarter driven by a 53% increase in total revenue. Given the high
margin nature of our revenue sources, Adjusted EBITDA increased
125% over the third quarter of last year. We continued to see
momentum build outside of our wholesale services, reflecting new
initiatives in Commercial IoT,” said Rebecca Clary, Chief Financial
Officer. Clary continued, “As a result, we are increasing guidance
for 2023 total revenue to a new range between $215 and $230
million.”
Dr. Paul E. Jacobs, Chief Executive Officer, said, “Twenty-five
years ago yesterday, my father made the first satellite phone call
on the Globalstar network to Bernard Schwarz, his partner at Loral.
Today, I’m excited to be leading Globalstar as we embark on a new
chapter that builds on their vision. New applications, services,
and network configurations are driving increased demand for
connectivity, on the ground and from space. Globalstar has the
technology and team to capitalize on these opportunities.”
“My first sixty days were spent meeting with customers and
partners and reviewing our products and projects. I met with our
teams across the country, as well as with shareholders and industry
analysts. There is a lot of excitement about Globalstar's
potential.”
Dr. Jacobs continued, “We can deliver solutions at scale across
the globe. As we position the Company for longer term growth, we
are evaluating significant opportunities, both satellite and
terrestrial. Furthermore, our new XCOMP technology, which enhances
wireless performance including spectral efficiency, opens an
entirely new revenue category for us going forward.”
“The transformation over the last year and performance to date
reflects just the beginning of our efforts. We have new satellites
underway, an expanding Band 53-capable ecosystem, and the ability
to provide services to a large and ever increasing number of people
around the world. Our continuing goal is to leverage our unique
assets, our proprietary technologies and our team's industry
leadership to differentiate our products and services in the space
and terrestrial markets."
THIRD QUARTER FINANCIAL REVIEW
Total Revenue
Total revenue increased $20.1 million, or 53%, to $57.7 million
during the third quarter of 2023 compared to the third quarter of
2022, due to higher service revenue.
Service Revenue
Service revenue increased $20.3 million, or 61%, during the
third quarter of 2023, due primarily to higher wholesale service
revenue. This revenue stream increased $20.5 million from the prior
year quarter. This increase was due largely to the launch of
services in late 2022 as well as continued performance associated
with the construction of additional satellites, gateway site
improvements and the achievement of other certain milestones.
Consistent with previous quarters this year, subscriber driven
revenue was led by growth in Commercial IoT, which saw a revenue
increase of 36% from the third quarter of 2022, due to increases in
both ARPU and the subscriber base. The increase in ARPU was driven
by higher usage as well as the mix of rate plans on which
subscribers activate. Gross subscriber activations were up 26% over
the last twelve months, compared to the preceding twelve-month
period. The third quarter of 2023 set another record for gross
subscriber activations, reaching a new record high in any
twelve-month period since we started selling Commercial IoT
products.
Regarding our legacy services, SPOT was down due to fewer
average subscribers. Equipment sales and gross activations over the
last twelve months were impacted for several quarters by inventory
shortages and back orders of two of our core SPOT products. Second
quarter 2023 was the first full quarter of normal production of
these devices, and we have seen a correlated increase in
activations. Duplex service revenue declined at an expected rate
due to attrition in the subscriber base, offset partially by an
ARPU increase.
Subscriber Equipment Sales
Subscriber equipment sales decreased $0.3 million or 7% in the
third quarter of 2023 compared to the third quarter of 2022. This
decrease was due primarily to a spike in sales during the third
quarter of 2022 following the resolution of certain production
issues in that quarter, which resulted in the fulfillment of many
Commercial IoT device back orders.
SPOT equipment revenue increased 12% from the prior year's
quarter. Starting in the second quarter of 2023, all SPOT products
returned to ordinary production levels, contributing to an increase
in revenue during 2023. The volume of both SPOT Gen4 and Trace
device sales was up over 100% from the prior year's quarter. All
SPOT products are now being manufactured in the ordinary course of
business.
Income (Loss) from Operations
Income from operations was $2.0 million during the third quarter
of 2023, compared to loss from operations of $186.6 million during
the third quarter of 2022. The prior year's quarter was impacted by
a non-cash impairment charge of $174.5 million following the
abandonment of our second-generation Duplex assets during the third
quarter of 2022. Excluding this non-cash charge, the fluctuation in
income (loss) from operations was due to higher service revenue
(discussed above) offset partially by an increase in operating
expenses.
Cost of services increased resulting from higher gateway
operating costs, such as lease, maintenance, security, IT and
personnel expenses, which have increased in line with our new and
upgraded global ground infrastructure. A significant portion of
these costs are reimbursed to us and this consideration is
recognized as revenue.
Management, general and administrative costs (MG&A) costs
were higher during the third quarter of 2023 due in part to costs
incurred to enter into and support the License Agreement with
XCOM.
Stock-based compensation increased from the prior year's quarter
due primarily to restricted stock units granted in connection with
the License Agreement, as well as the modification of certain
awards. Additionally, increased compensation cost associated with
our annual bonus plan, which is generally paid in the form of
Globalstar common stock, increased year over year.
Net Loss
Net loss was $6.2 million for the third quarter of 2023,
compared to net loss of $204.4 million for the third quarter of
2022. This variance was due primarily to an improvement in
operating income (discussed above), coupled with lower interest
expense and a favorable fluctuation in foreign currency losses.
Interest expense was lower during the third quarter of 2023 due to
the payoff of the 2019 Facility Agreement during the first quarter
of 2023, as well as higher capitalized interest (which reduces
interest expense) due to an increase in capital expenditures as we
complete work related to our new satellites.
Adjusted EBITDA
Adjusted EBITDA was $32.0 million during the third quarter of
2023, an increase of $17.8 million or 125% compared to the prior
year's quarter, due to higher revenue offset partially by higher
operating expenses (excluding EBITDA adjustments) for the reasons
previously discussed. Adjusted EBITDA is a non-GAAP financial
measure. For more information on its usage and presentation, as
well as a reconciliation to GAAP net income (loss), refer to
“Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted
EBITDA”.
YEAR TO DATE FINANCIAL REVIEW
Total Revenue
Total revenue increased $64.2 million, or 60%, for the nine
months ended September 30, 2023 compared to the same period in
2022. This increase was due to both higher service revenue and
revenue generated from subscriber equipment sales.
Service Revenue
Consistent with the quarterly results discussed above, service
revenue increased due primarily to higher wholesale capacity
service revenue. Additionally, higher subscribers and ARPU
generated a 17% increase in Commercial IoT service revenue.
Partially offsetting this increase were fewer Duplex and SPOT
average subscribers for the reasons discussed above.
Subscriber Equipment Sales
Subscriber equipment sales increased 40% due to production
challenges in the comparable prior year period.
Income (Loss) from Operations
Income from operations was $11.8 million for the nine months
ended September 30, 2023 compared to a loss from operations of
$211.7 million during the same period in 2022. As discussed above,
nonrecurring non-cash impairment charges were recorded in 2022.
Excluding this non-cash charge, higher revenue was partially offset
by higher operating expenses.
The increases in cost of services and MG&A are consistent
with the quarterly discussion above and in line with the continued
increase over past few quarters of 2023. Cost of subscriber
equipment sales are higher, consistent with the increase in revenue
generated from subscriber equipment sales, with margins narrowing
slightly due to the mix of products sold this year.
Net Loss
Net loss improved to $9.6 million for the nine months ended
September 30, 2023 from $251.6 million during 2022. Improved
operating income (discussed above) was coupled with favorable
changes in exchange rate fluctuations and lower interest
expense.
Adjusted EBITDA
Adjusted EBITDA was $91.6 million for the year to date period,
an increase of $52.5 million or 134% compared to the prior year
period, due to higher revenue offset partially by higher operating
expenses (excluding EBITDA adjustments) for the reasons previously
discussed. Adjusted EBITDA is a non-GAAP financial measure. For
more information on its usage and presentation, as well as a
reconciliation to GAAP net income (loss), refer to “Reconciliation
of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA”.
Liquidity
As of September 30, 2023, we held cash and cash equivalents of
$64.1 million, compared to $32.1 million as of December 31, 2022.
Over the next twelve months, our sources of cash are also expected
to include operating cash flows generated from the business and
payments under the 2023 Funding Agreement. These sources of cash
will be used to pay capital expenditures associated with the new
satellites and associated launch costs as well as debt service
costs.
FINANCIAL OUTLOOK
We update our previously issued financial guidance for full year
2023 with anticipated results included below. Note that this
outlook excludes revenue from terrestrial spectrum
opportunities.
- Total revenue between $215 million and $230 million, which
would represent an increase of approximately 45% to 55% over 2022
total revenue.
- Adjusted EBITDA margin of approximately 55%, compared to 39% in
2022.
CONFERENCE CALL INFORMATION
As previously announced, the Company will host a conference call
to discuss its results at 9:00 a.m. Eastern Time (ET) on Thursday,
November 2, 2023. Details are as follows:
Earnings Call:
The earnings call will be available via
webcast from the following link.
Webcast Link:
https://edge.media-server.com/mmc/p/rzh3ewbe
To participate in the earnings call via
teleconference, participants should register at the following link
to receive an email containing the dial-in number and unique
passcode.
Participant Teleconference Registration
Link:
https://register.vevent.com/register/BIb1795fb234da4e7aab66e71fedae905f
Audio Replay:
For those unable to participate in the
live call, a replay of the webcast will be available in the
Investor Relations section of the Company's website.
About Globalstar, Inc.
Globalstar empowers its customers to connect, transmit, and
communicate in smarter ways – easily, quickly, securely, and
affordably – offering reliable satellite and terrestrial
connectivity services as an international telecom infrastructure
provider. The Company’s LEO satellite constellation assures secure
data transmission for connecting and protecting assets,
transmitting critical operational data, and saving lives – from any
location – for consumers, businesses, and government agencies
across the globe. Globalstar’s terrestrial spectrum, Band 53, and
its 5G variant, n53, offers carriers, cable companies, and system
integrators a versatile, fully licensed channel for private
networks with a growing ecosystem to improve customer wireless
connectivity, while Globalstar’s XCOMP technology offers
significant capacity gains in dense wireless deployments. In
addition to SPOT GPS messengers, Globalstar offers next-generation
IoT hardware and software products for efficiently tracking and
monitoring assets, processing smart data at the edge, and managing
analytics with cloud-based telematics solutions to drive safety,
productivity, and profitability.
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, 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
ability to identify and realize opportunities and to generate the
expected revenues and other benefits of the license agreement, our
ability to integrate the licensed technology into our current line
of business, the ability of Dr. Jacobs and other new employees to
drive innovation and growth, our expectations with respect to the
pursuit of terrestrial spectrum authorities globally, the success
of current and potential future applications for our terrestrial
spectrum, future increases in our revenue and profitability, our
ability to meet our obligations under, and profit from, the Service
Agreements, 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenue:
Service revenue
$
53,643
$
33,301
$
155,245
$
95,693
Subscriber equipment sales
4,040
4,325
16,154
11,505
Total revenue
57,683
37,626
171,399
107,198
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
13,872
11,294
37,938
32,783
Cost of subscriber equipment sales
3,458
3,490
13,429
9,153
Cost of subscriber equipment sales -
reduction in the value of inventory
—
8,537
—
8,553
Marketing, general and administrative
12,090
8,607
31,843
25,166
Stock-based compensation
4,346
2,100
10,638
4,575
Reduction in the value of long-lived
assets
35
166,001
35
166,526
Depreciation, amortization, and
accretion
21,865
24,238
65,688
72,151
Total operating expenses
55,666
224,267
159,571
318,907
Income (loss) from operations
2,017
(186,641
)
11,828
(211,709
)
Other (expense) income:
Loss on extinguishment of debt
—
—
(10,403
)
—
Interest income and expense, net of
amounts capitalized
(3,945
)
(7,583
)
(11,047
)
(24,300
)
Foreign currency loss
(4,151
)
(9,406
)
(206
)
(13,297
)
Derivative gain (loss) and other
25
(884
)
373
(2,223
)
Total other expenses
(8,071
)
(17,873
)
(21,283
)
(39,820
)
Loss before income taxes
(6,054
)
(204,514
)
(9,455
)
(251,529
)
Income tax expense (benefit)
115
(153
)
185
51
Net loss
$
(6,169
)
$
(204,361
)
$
(9,640
)
$
(251,580
)
Net loss attributable to common
shareholders
(8,842
)
(204,361
)
(17,572
)
(251,580
)
Net loss per common share:
Basic
$
0.00
$
(0.11
)
$
(0.01
)
$
(0.14
)
Diluted
0.00
(0.11
)
(0.01
)
(0.14
)
Weighted-average shares outstanding:
Basic
1,836,251
1,800,504
1,820,582
1,799,364
Diluted
1,836,251
1,800,504
1,820,582
1,799,364
GLOBALSTAR, INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except par value
and share data)
(Unaudited)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
64,136
$
32,082
Accounts receivable, net of allowance for
credit losses of $2,086 and $2,892, respectively
43,218
26,329
Inventory
12,197
9,264
Prepaid expenses and other current
assets
24,087
13,569
Total current assets
143,638
81,244
Property and equipment, net
612,911
560,371
Operating lease right of use assets,
net
34,273
30,859
Prepaid satellite costs and customer
receivable
13,600
27,570
Intangible and other assets, net of
accumulated amortization of $12,060 and $10,908, respectively
106,190
38,425
Total assets
$
910,612
$
738,469
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
32,200
$
—
Accounts payable
3,631
3,843
Vendor financing
—
59,575
Accrued expenses
24,837
22,554
Accrued satellite construction costs
65,744
36,139
Payables to affiliates
153
326
Deferred revenue, net
58,091
74,639
Total current liabilities
184,656
197,076
Long-term debt
307,130
132,115
Operating lease liabilities
29,524
27,635
Deferred revenue, net
2,020
62,877
Other non-current liabilities
3,916
3,995
Total non-current liabilities
342,590
226,622
Stockholders’ equity:
Preferred Stock of $0.0001 par value;
99,700,000 shares authorized and none issued and outstanding at
September 30, 2023 and December 31, 2022, respectively
—
—
Series A Preferred Convertible Stock of
$0.0001 par value; 300,000 shares authorized and 149,425 issued and
outstanding at September 30, 2023 and December 31, 2022,
respectively
—
—
Voting Common Stock of $0.0001 par value;
2,150,000,000 shares authorized; 1,876,120,002 and 1,811,074,696
shares issued and outstanding at September 30, 2023 and December
31, 2022, respectively
188
181
Additional paid-in capital
2,424,073
2,345,612
Accumulated other comprehensive income
9,009
9,242
Retained deficit
(2,049,904
)
(2,040,264
)
Total stockholders’ equity
383,366
314,771
Total liabilities and stockholders’
equity
$
910,612
$
738,469
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss
$
(6,169
)
$
(204,361
)
$
(9,640
)
$
(251,580
)
Interest income and expense, net
3,945
7,583
11,047
24,300
Derivative (gain) loss
56
(662
)
(243
)
1,066
Income tax expense (benefit)
115
(153
)
185
51
Depreciation, amortization, and
accretion
21,865
24,238
65,688
72,151
EBITDA
19,812
(173,355
)
67,037
(154,012
)
Non-cash compensation
4,346
2,100
10,638
4,575
Non-cash consideration under SSA (2)
892
—
892
—
Foreign exchange gain and other
4,070
9,451
(234
)
12,953
Reduction in value of inventory and
long-lived assets
35
174,538
35
175,079
License Agreement transaction costs
2,851
—
2,851
—
Non-cash settlement of pension plan
—
1,501
—
1,501
Loss on extinguishment of debt
—
—
10,403
—
Shareholder litigation cost recovery
—
—
—
(1,000
)
Adjusted EBITDA (1)
$
32,006
$
14,235
$
91,622
$
39,096
(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 non-cash or
non-recurring charges as applicable. Management uses Adjusted
EBITDA 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 revenues and operating
profit, to measure operating performance.
(2)
In connection with the License Agreement
with XCOM, the Company entered into a Support Services Agreement
(the “SSA”) with XCOM. Fees payable by Globalstar pursuant to the
SSA were paid in shares of its common stock.
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING
METRICS
(In thousands, except subscriber
and ARPU data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Service revenue:
Subscriber services
Duplex
$
7,978
$
9,021
$
20,088
$
22,103
SPOT
11,350
11,753
33,703
34,544
Commercial IoT
6,347
4,673
16,881
14,381
Wholesale capacity services
27,517
6,972
83,406
22,640
Engineering and other services
451
882
1,167
2,025
Total service revenue
53,643
33,301
155,245
95,693
Subscriber equipment sales:
SPOT
1,746
1,558
6,185
4,707
Commercial IoT
2,262
2,713
9,975
6,427
Other
32
54
(6
)
371
Total subscriber equipment sales
4,040
4,325
16,154
11,505
Total revenue
$
57,683
$
37,626
$
171,399
$
107,198
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Average subscribers
Duplex
33,501
41,204
35,143
42,046
SPOT
258,485
276,203
262,818
275,250
Commercial IoT
477,344
444,397
472,812
434,338
Other
376
428
391
13,337
Total
769,706
762,232
771,164
764,971
ARPU (1)
Duplex
$
79.38
$
72.98
$
63.51
$
58.41
SPOT
14.64
14.18
14.25
13.94
Commercial IoT
4.43
3.51
3.97
3.68
(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/20231102335876/en/
Investor Contact Information:
investorrelations@globalstar.com
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