10-QPeriod: Q3 FY2016

Globalstar, Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 3, 2016For Securities:GSAT

Summary

Globalstar, Inc.'s third-quarter 2016 report shows a notable increase in total revenue, driven primarily by strong performance in service revenues, particularly from Duplex and SPOT services. While overall revenue grew, subscriber equipment sales experienced a decline. The company continues to invest in its network infrastructure, with significant amounts in construction in progress for next-generation upgrades. Despite revenue growth, the company reported a net loss for the quarter and the nine-month period. Significant derivative gains contributed positively to the income statement in the prior year, with reduced impact in the current period. The company is managing its debt obligations, including a substantial Facility Agreement and a subordinated Thermo Loan Agreement, and anticipates utilizing its remaining common stock purchase agreement with Terrapin to maintain covenant compliance and fund operations.

Financial Highlights

45 data points
Beta

Revenue

$25.54M

90.6% Gross Margin

Net Income

-$2.58M

-10.1% Net Margin

EPS (Diluted)

$0.00

Total Assets

$1.15B

Cash & Equivalents

$12.91M

Free Cash Flow

$5.40M

Financial Statements
Beta
Revenue$25.54M
Cost of Revenue$2.41M
Gross Profit$23.13M
SG&A Expenses$10.08M
Operating Expenses$40.31M
Operating Income-$14.76M
Net Income-$2.58M
Shares Outstanding (Basic)72.02M
Shares Outstanding (Diluted)72.02M

Key Highlights

  • 1Total revenue increased by 8% for the three months ended September 30, 2016, reaching $25.6 million, primarily driven by a $2.3 million increase in service revenue.
  • 2Service revenue across Duplex and SPOT services showed significant year-over-year growth, with Duplex service revenue up 26% and SPOT service revenue up 10% for the three-month period.
  • 3Subscriber equipment sales decreased by 11% to $3.6 million for the three months ended September 30, 2016, largely due to lower sales volumes in Simplex and Duplex equipment.
  • 4The company reported a net loss of $2.6 million for the three months ended September 30, 2016, compared to a net income of $24.1 million in the prior year period.
  • 5Depreciation, amortization, and accretion remained stable at approximately $19.4 million for the three-month periods.
  • 6As of September 30, 2016, the company had $12.9 million in cash and cash equivalents, with $31.5 million remaining available under its common stock purchase agreement with Terrapin.
  • 7The company's long-term debt, net of current portion, stood at $547.3 million as of September 30, 2016.

Frequently Asked Questions

Globalstar reported total revenue of $25.5 million for the three months ended September 30, 2016, an increase of 8% from $23.7 million in the same period of 2015. This growth was primarily driven by an increase in service revenues, particularly from Duplex and SPOT services, which offset a decline in subscriber equipment sales.

The company reported a net loss of $2.6 million for the three months ended September 30, 2016. This contrasts with a net income of $24.1 million in the corresponding period of 2015, which was significantly influenced by substantial derivative gains.

As of September 30, 2016, Globalstar had $12.9 million in cash and cash equivalents. The company has a significant debt load, with $547.3 million in long-term debt. It has $31.5 million remaining under its common stock purchase agreement with Terrapin, which it expects to utilize for covenant compliance and debt service. The company also has a restricted cash balance of $38.0 million in its debt service reserve account.

The increase in service revenue is attributed to growth in both the average subscriber base and Average Monthly Revenue Per User (ARPU). Specifically, Duplex service revenue rose due to higher usage-based plans, and SPOT service revenue increased due to rate plan adjustments and higher sales of the SPOT Gen3 device.