Summary
Globalstar, Inc.'s third-quarter 2018 report shows a notable increase in revenue, driven by higher service revenue across its core product categories, particularly Duplex and SPOT services, and an increase in subscriber equipment sales. The company adopted ASC Topic 606, "Revenue from Contracts with Customers," which has impacted revenue recognition timing. Despite revenue growth, operating expenses also rose, largely due to increased depreciation, amortization, and legal costs associated with strategic initiatives and litigation. The company's liquidity remains a focus, with significant debt obligations and ongoing efforts to arrange funding. Derivative gains significantly boosted net income, largely influenced by fluctuations in Globalstar's stock price.
Financial Highlights
42 data pointsBeta
Financial Statements
Beta
| Revenue | $35.69M |
| SG&A Expenses | $15.06M |
| Operating Expenses | $53.65M |
| Operating Income | -$17.96M |
| Net Income | $9.02M |
| EPS (Basic) | $0.15 |
| EPS (Diluted) | $-0.30 |
| Shares Outstanding (Basic) | 84.30M |
| Shares Outstanding (Diluted) | 95.19M |
Key Highlights
- 1Total revenue increased by 17% to $35.7 million for the three months ended September 30, 2018, and by 18% to $98.2 million for the nine months ended September 30, 2018, compared to the prior year periods.
- 2Service revenue was the primary driver of growth, increasing by 15% and 18% for the three and nine-month periods, respectively, primarily due to higher Average Revenue Per User (ARPU) across Duplex and SPOT services.
- 3The company adopted ASC Topic 606, "Revenue from Contracts with Customers," on January 1, 2018, using the modified retrospective method, which impacts the timing of revenue recognition.
- 4Operating expenses increased by 30% for the quarter and 5% for the nine months, driven by higher depreciation, amortization, and legal/advisor costs related to strategic opportunities and litigation.
- 5A significant derivative gain of $39.1 million was recorded for the three months ended September 30, 2018, contributing substantially to net income. Derivative gains were $145.9 million for the nine-month period.
- 6The company anticipates needing an 'Equity Cure Contribution' to maintain compliance with financial covenants under its Facility Agreement for the measurement period ending December 31, 2018, with the source of funds not yet fully arranged.
- 7Restricted cash, primarily from the debt service reserve account under the Facility Agreement, stood at $52.9 million as of September 30, 2018.
Frequently Asked Questions
The primary driver of Globalstar's revenue increase is a rise in service revenue across its Duplex and SPOT product categories, attributed to higher Average Revenue Per User (ARPU) due to price increases on certain legacy rate plans and the adoption of ASC 606, which impacts revenue recognition timing. Subscriber equipment sales also contributed positively.
Operating expenses saw a substantial increase, primarily driven by higher depreciation, amortization, and accretion expenses due to assets placed into service for the next-generation ground infrastructure. Additionally, marketing, general, and administrative expenses increased due to costs associated with strategic opportunities, the proposed merger, and related litigation.
Globalstar faces significant debt obligations, with $495.3 million in total debt outstanding as of September 30, 2018. The company anticipates needing an 'Equity Cure Contribution' to maintain compliance with its Facility Agreement covenants for the year-end measurement period, and the source of these funds is not yet finalized. Restricted cash, held in a debt service reserve account, was $52.9 million.
Derivative instruments had a significant positive impact on Globalstar's net income. The company recorded substantial derivative gains, totaling $39.1 million for the three months and $145.9 million for the nine months ended September 30, 2018. These gains are largely influenced by fluctuations in the company's stock price and are recognized in 'Other Income (Expense)'.