Globalstar Announces Second Quarter 2018 Results

August 2, 2018

COVINGTON, La.--(BUSINESS WIRE)--Aug 2, 2018--Globalstar, Inc. (NYSE American: GSAT) today announced its financial results for the quarter ended June 30, 2018.

Jay Monroe, Chairman and Chief Executive Officer of Globalstar, commented, “As disclosed yesterday, Globalstar, following the unanimous recommendation of its Special Committee of independent directors, and Thermo terminated the proposed merger agreement by mutual written agreement. While I believe that this merger would have positioned Globalstar more strongly for the future, this transaction is no longer the path forward. Instead, we will continue to run the satellite business on a standalone basis. While we remain focused on Globalstar’s satellite business and spectrum, if the opportunity to strengthen the Company and enhance shareholder value through a strategic transaction arises, we will consider it.”

Mr. Monroe continued, “We continue to improve the financial and operating results of our satellite business, while pursuing various international regulatory and 3GPP approvals. During the second quarter, Globalstar increased total revenue by 20% with increases in both service revenue and subscriber equipment sales in core product categories. While ARPU has been climbing consistently for several quarters, we also increased subscriber equipment sales this quarter with the recent launch of three new products. We have experienced positive market reception to these products, with the strongest response coming from our SmartOne Solar TM IoT device. The success of this solar-powered asset tracking product resulted in significant back-orders at the end of the quarter, while still contributing to the narrowing of our net loss and a 37% increase in Adjusted EBITDA over the prior year’s second quarter.”



Total revenue for the second quarter of 2018 increased by $5.6 million, or 20%, from the second quarter of 2017. This increase resulted primarily from higher service revenue and subscriber equipment sales across all core revenue streams.

Service revenue increased $3.7 million, or 15%, in the second quarter of 2018 compared to the second quarter of 2017. The majority of this increase resulted from higher SPOT service revenue, which grew $2.7 million due to increases in ARPU and average subscribers. ARPU, which increased 19% following rate plan changes, was the main component of this growth, contributing $2.2 million to the service revenue increase. A 4% increase in the average SPOT subscriber base, resulting from growth in both legacy and new product customers, also positively impacted service revenue when compared to the second quarter of 2017. Higher Duplex and Simplex service revenue of $0.8 million and $0.7 million, respectively, further contributed to the total service revenue increase.

Subscriber equipment sales revenue increased $1.9 million, or 50%, following the introduction of new products during 2018, including the successful launch of a new commercial IoT Simplex product that alone contributed $2.0 million to equipment revenue during the second quarter. As anticipated, sales of certain legacy products, particularly in the Duplex and SPOT channels, declined during the quarter following the launch of next-generation devices largely offsetting the revenue generated from these product introductions. The Company is working through certain product availability and mass production issues that will need to be solved before Duplex and SPOT equipment revenue grows in proportion to the demand the Company is experiencing for these products.

Operating Income (Loss)

Operating income (loss) improved $14.4 million from a loss of $12.4 million in the second quarter of 2017 to income of $2.0 million in the second quarter of 2018. This change was due primarily to a $5.6 million increase in total revenue (for reasons previously discussed) and a $8.8 million decrease in operating expenses. A decrease in expense of $20.5 million was recorded during the quarter relating to a previously recorded contract termination charge. Partially offsetting this decrease was a $6.5 million increase in marketing, general and administrative (MG&A) expenses primarily from higher costs to support the proposed merger with Thermo Acquisitions, Inc. that was announced in April 2018 and terminated in July 2018. A $3.3 million increase in depreciation, amortization and accretion expense also contributed to the increase in operating expenses as a portion of the costs from our upgraded ground infrastructure was placed into service during the second quarter commensurate with the launch of our Sat-Fi2 TM device. Cost of services and cost of subscriber equipment sales were also up from the second quarter of 2017 by $0.5 million and $1.4 million, respectively.

Net Loss

Net loss decreased $91.7 million during the second quarter of 2018 due primarily to a lower non-cash derivative loss of $75.0 million. Changes in the Company’s stock price and volatility assumptions were the primary factors of the derivative adjustments recorded during the respective quarters. Also contributing to the decrease in net loss was an accrual for the settlement of a business economic loss claim reached during the second quarter of 2018 and expected to be paid in equal installments in January 2019 and 2020.

Adjusted EBITDA

Adjusted EBITDA increased 37% to $11.2 million during the second quarter of 2018 primarily from a $5.6 million increase in total revenue, offset partially by a $2.6 million increase in total operating expenses (excluding EBITDA adjustments). Driving this improvement was an increase in service revenue and equipment margin, offset partially by an increase in cost of services and MG&A expenses due to higher network and subscriber acquisition costs.


The Company will conduct an investor conference call on August 2, 2018 at 5:00 p.m. ET to discuss its second quarter 2018 financial results.

About Globalstar, Inc.

Globalstar is a leading provider of mobile satellite voice and data services. 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 the pursuit of terrestrial spectrum authorities globally, 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.

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CONTACT: Globalstar, Inc.

Samantha DeCastro




SOURCE: Globalstar, Inc.

Copyright Business Wire 2018.

PUB: 08/02/2018 04:24 PM/DISC: 08/02/2018 04:24 PM


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