10-QPeriod: Q3 FY2010

Globalstar, Inc. Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 9, 2010For Securities:GSAT

Summary

Globalstar, Inc. reported a net loss of $24.5 million for the third quarter of 2010, an increase from the $5.5 million net loss in the same period of 2009. Revenue saw a modest increase of 4% year-over-year, driven primarily by higher sales of subscriber equipment, particularly its simplex products like the SPOT Satellite GPS messenger. This growth was partially offset by a continued decline in service revenue from its duplex (two-way) communication services, which are affected by satellite performance issues. The company is heavily investing in its second-generation satellite constellation, with significant capital expenditures in property and equipment. While this investment is crucial for future growth and improved services, it also contributed to increased depreciation and amortization expenses. Despite the ongoing net losses, Globalstar's cash position remains stable, and it has access to a significant credit facility to fund its operations and ongoing capital projects. The company is navigating complex debt structures and regulatory hurdles, including securing necessary satellite communication licenses.

Financial Highlights

25 data points
Beta

Revenue

$18.22M

81.7% Gross Margin

Net Income

-$24.49M

-134.4% Net Margin

EPS (Diluted)

$-1.35

Cash & Equivalents

$57.45M

Free Cash Flow

-$3.81M

Financial Statements
Beta
Revenue$18.22M
Cost of Revenue$3.33M
Gross Profit$14.89M
SG&A Expenses$12.91M
Operating Expenses$31.54M
Operating Income-$13.31M
Interest Expense$1.20M
Net Income-$24.49M
EPS (Basic)$-1.35
EPS (Diluted)$-1.35
Shares Outstanding (Basic)19.17M
Shares Outstanding (Diluted)19.17M

Key Highlights

  • 1Net loss for the third quarter of 2010 was $24.5 million, a significant increase from the $5.5 million loss in Q3 2009.
  • 2Total revenue increased by 4% to $18.2 million in Q3 2010, driven by a 13% rise in subscriber equipment sales, largely due to simplex products.
  • 3Service revenue remained relatively flat at $13.4 million, with growth in simplex services offset by a decline in duplex services due to satellite performance issues.
  • 4The company's investment in its second-generation satellite constellation continues, with significant capital expenditures in property and equipment.
  • 5Total debt increased to $625.5 million at September 30, 2010, from $463.6 million at December 31, 2009.
  • 6Cash and cash equivalents decreased to $57.5 million from $67.9 million over the same period.
  • 7Globalstar made progress in obtaining necessary satellite communication licenses required for its Facility Agreement.

Frequently Asked Questions

Revenue increased by 4% to $18.2 million for the three months ended September 30, 2010, primarily due to a 13% increase in subscriber equipment sales. This growth was largely driven by higher sales of simplex products, such as the SPOT Satellite GPS messenger. The company also saw growth in simplex service revenue, which offset a decline in its duplex service revenue.

The net loss widened significantly to $24.5 million in the third quarter of 2010, compared to $5.5 million in the prior year. This was mainly due to a substantial derivative loss of $9.2 million in the current quarter, compared to a gain of $6.0 million in the prior year, largely influenced by changes in stock prices affecting derivative valuations. Additionally, increased depreciation, amortization, and accretion expenses related to the Axonn acquisition and ongoing second-generation satellite development contributed to the higher loss.

Total long-term debt increased to $625.5 million at September 30, 2010, from $463.6 million at December 31, 2009. Cash and cash equivalents decreased to $57.5 million from $67.9 million during the same period. The company has a significant Facility Agreement providing access to funds, and management believes it has sufficient resources to meet its obligations for at least the next 12 months.

Globalstar successfully launched six new second-generation satellites in October 2010. The company is continuing with the construction and launch of its second-generation constellation, which is a major focus for capital expenditures and is expected to improve service quality and coverage. The company has entered into various agreements for satellite construction, ground equipment, and launch services.