10-QPeriod: Q2 FY2019

Globalstar, Inc. Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 9, 2019For Securities:GSAT

Summary

Globalstar, Inc. reported a net income of $6.19 million for the three months ended June 30, 2019, a significant improvement from a net loss of $7.01 million in the prior year's comparable quarter. This turnaround was largely driven by a substantial derivative gain of $35.12 million, which more than offset a decrease in service and equipment revenue. For the six months ended June 30, 2019, the company reported a net income of $31.96 million, also a considerable increase from $80.92 million in the same period of 2018, though this figure was significantly influenced by derivative gains and a one-time contract termination charge reversal in the prior year. Total revenue saw a slight decrease year-over-year, reflecting challenges in Duplex and SPOT service revenue, partially offset by growth in Commercial IoT. The company continues to manage its significant debt obligations and is actively pursuing refinancing options to improve its capital structure.

Financial Highlights

41 data points
Beta

Revenue

$31.19M

Net Income

$6.19M

19.8% Net Margin

EPS (Diluted)

$-0.15

Total Assets

$1.04B

Cash & Equivalents

$25.09M

Free Cash Flow

-$868K

Financial Statements
Beta
Revenue$31.19M
SG&A Expenses$11.02M
Operating Expenses$47.85M
Operating Income-$16.66M
Net Income$6.19M
EPS (Diluted)$-0.15
Shares Outstanding (Basic)96.69M
Shares Outstanding (Diluted)109.36M

Key Highlights

  • 1Reported a net income of $6.19 million for Q2 2019, a turnaround from a net loss of $7.01 million in Q2 2018.
  • 2Significant derivative gain of $35.12 million in Q2 2019 contributed substantially to profitability.
  • 3Total revenue for the quarter decreased to $31.19 million from $33.73 million in Q2 2018, primarily due to lower service revenue.
  • 4Commercial IoT service revenue increased by 35% year-over-year, indicating growth in this segment.
  • 5The company's long-term debt remains substantial, standing at $392.71 million as of June 30, 2019.
  • 6Globalstar is actively pursuing debt refinancing to improve its capital structure, with options including a complete debt refinancing or an amendment to existing agreements.
  • 7Cash used in investing activities decreased significantly to $5.10 million in the first six months of 2019 from $8.90 million in the prior year period.

Frequently Asked Questions

The primary driver of Globalstar's profitability in the second quarter of 2019 was a substantial derivative gain of $35.12 million. This gain significantly offset the decrease in service and subscriber equipment revenue and the increase in operating expenses.

Globalstar is actively engaged in discussions and pursuing options to refinance its debt. The company is considering two main alternatives: a complete refinancing of its existing debt, potentially involving new first and second lien term loan facilities, or an amendment to its current Facility Agreement coupled with a new second lien credit facility. The goal is to improve the company's capital structure and manage liquidity concerns.

Total revenue saw a slight decrease year-over-year. While Duplex and SPOT service revenues declined, Commercial IoT service revenue showed strong growth of 35% in the quarter. Subscriber equipment sales also experienced a decline.

Globalstar continues to pursue terrestrial authorizations for its licensed 2.4 GHz spectrum globally. The company obtained approval for a new defined band class, Band 53, from 3GPP, which is expected to facilitate integration into handset and infrastructure ecosystems, potentially enabling future partnerships for high-density dedicated networks.