Market Overview

Globalstar Announces Second Quarter 2018 Results

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Globalstar, Inc. (NYSE: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
SolarTM 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."

SECOND QUARTER FINANCIAL REVIEW

Revenue

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-Fi2TM 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.

CONFERENCE CALL

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.

 
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/corporate.
If you would like to participate in the live question and answer
session following the Company's conference call, please dial 1
(800) 708-4540 (US and Canada), 1 (847) 619-6397 (International)
and use the participant pass code 47222669.

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 August 2, 2018. Dial: 1 (888)
843-7419 (US and Canada), 1 (630) 652-3042 (International) and pass
code 4722 2669#.
 

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.

 
 
 
 
 

GLOBALSTAR, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS

(In thousands, except per share data)
(Unaudited)

 
        Three Months Ended
June 30,
2018     2017
Revenue:
Service revenue $ 27,995 $ 24,301
Subscriber equipment sales 5,731   3,822  
Total revenue 33,726   28,123  
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and
accretion shown separately below)
9,526 9,036
Cost of subscriber equipment sales 4,170 2,778
Marketing, general and administrative 15,944 9,473
Revision to contract termination charge (20,478 )
Depreciation, amortization, and accretion 22,616   19,275  
Total operating expenses 31,778   40,562  
Operating income (loss) 1,948   (12,439 )
Other income (expense):
Gain on equity issuance 1,964
Interest income and expense, net of amounts capitalized (10,305 ) (8,850 )
Derivative loss (2,059 ) (77,130 )
Gain on legal settlement 6,779
Other (3,351 ) (2,173 )
Total other income (expense) (8,936 ) (86,189 )
Loss before income taxes (6,988 ) (98,628 )
Income tax expense 24   106  
Net loss $ (7,012 ) $ (98,734 )
 
Net loss per common share:
Basic $ (0.01 ) $ (0.09 )
Diluted (0.01 ) (0.09 )
Weighted-average shares outstanding:
Basic 1,263,372 1,128,985
Diluted 1,263,372 1,128,985
 
 
 
 
 
 

GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET INCOME
(LOSS) TO NON-GAAP ADJUSTED EBITDA

(In thousands)
(Unaudited)

 
        Three Months Ended
June 30,
2018     2017
Net loss $ (7,012 ) $ (98,734 )
 
Interest income and expense, net 10,305 8,850
Derivative loss 2,059 77,130
Income tax expense 24 106
Depreciation, amortization, and accretion 22,616   19,275  
EBITDA 27,992 6,627
 
Non-cash compensation 1,749 1,426
Foreign exchange and other 3,290 1,864
Debt modification third party fees 238
Gain on equity issuance (1,964 )
Merger-related costs 5,427
Revision to contract termination charge (20,478 )
Gain on legal settlement (6,779 )  
Adjusted EBITDA (1) $ 11,201   $ 8,191  
 
(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-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 connection with the adoption of
ASU No. 2014-09, Revenue from Contracts with Customers, the
Company has not recast Adjusted EBITDA in 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
June 30,
2018     2017
Service     Equipment Service     Equipment
Revenue
Duplex $ 10,134 $ 750 $ 9,322 $ 612
SPOT 13,868 1,908 11,193 1,815
Simplex 3,216 2,846 2,526 1,072
IGO 216 136 376 330
Other 561 91 884 (7 )
$ 27,995 $ 5,731 $ 24,301 $ 3,822  
 
Average Subscribers
Duplex 67,456 72,290
SPOT 293,659 282,826
Simplex 345,749 300,459
IGO 25,988 37,162
 
ARPU (1)
Duplex $ 50.08 $ 42.98
SPOT 15.74 13.19
Simplex 3.10 2.80
IGO 2.77 3.37
 
(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. In connection with the adoption of
ASU No. 2014-09, Revenue from Contracts with Customers, the
Company has not recast revenue or ARPU in prior periods.
 
 
 
 

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