10-QPeriod: Q3 FY2019

Globalstar, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 12, 2019For Securities:GSAT

Summary

Globalstar, Inc. reported a net income of $21.1 million for the third quarter of 2019, a significant increase from $9.0 million in the same quarter of the prior year. This improvement was largely driven by a substantial derivative gain of $50.2 million, which offset an operating loss of $12.0 million. For the nine months ended September 30, 2019, net income was $53.1 million compared to $89.9 million in the prior year, also heavily influenced by derivative gains. Total revenue saw a modest increase to $38.6 million for the third quarter and $99.9 million for the first nine months of 2019, with service revenue showing growth, partly due to an out-of-period revenue adjustment. However, subscriber equipment sales declined. The company continues to manage a significant debt load, with long-term debt totaling $402.5 million as of September 30, 2019, and is actively negotiating amendments to its Facility Agreement to address potential covenant compliance issues and debt repayment schedules.

Financial Highlights

41 data points
Beta

Revenue

$38.61M

Net Income

$21.11M

54.7% Net Margin

EPS (Diluted)

$-0.15

Total Assets

$1.02B

Cash & Equivalents

$26.23M

Free Cash Flow

$3.12M

Financial Statements
Beta
Revenue$38.61M
SG&A Expenses$12.89M
Operating Expenses$50.62M
Operating Income-$12.01M
Net Income$21.11M
EPS (Basic)$0.15
EPS (Diluted)$-0.15
Shares Outstanding (Basic)96.78M
Shares Outstanding (Diluted)109.85M

Key Highlights

  • 1Reported a net income of $21.1 million for Q3 2019, up from $9.0 million in Q3 2018, primarily driven by a $50.2 million derivative gain.
  • 2Total revenue increased to $38.6 million in Q3 2019 from $35.7 million in Q3 2018, with service revenue showing growth.
  • 3Operating loss for Q3 2019 was $12.0 million, an improvement from $18.0 million in Q3 2018.
  • 4Long-term debt stood at $402.5 million as of September 30, 2019, with the company actively negotiating amendments to its Facility Agreement.
  • 5Cash and cash equivalents increased to $26.2 million as of September 30, 2019, from $15.2 million at the end of 2018.
  • 6The company recognized a $3.9 million out-of-period revenue adjustment in Q3 2019 related to ASC 606 adoption.
  • 7New lease accounting standards (ASC 842) resulted in the recognition of right-of-use assets and lease liabilities on the balance sheet.

Frequently Asked Questions

The significant increase in net income to $21.1 million in Q3 2019 from $9.0 million in Q3 2018 was primarily driven by a substantial derivative gain of $50.2 million, which helped to offset an operating loss of $12.0 million.

As of September 30, 2019, Globalstar had $402.5 million in long-term debt. The company is actively negotiating amendments to its Facility Agreement to address potential covenant compliance issues and revise the repayment schedule. They anticipated needing an 'Equity Cure Contribution' for compliance periods ending in June and December 2019.

Total revenue for Q3 2019 increased to $38.6 million from $35.7 million in Q3 2018. For the first nine months of 2019, total revenue was $99.9 million, up from $98.2 million in the same period of 2018. This growth was partly due to service revenue increases, including a $3.9 million out-of-period adjustment in Q3 2019. Subscriber equipment sales, however, saw a decline in both periods.

The adoption of ASC 842 on January 1, 2019, resulted in the recognition of right-of-use assets and lease liabilities on the balance sheet for operating leases. As of September 30, 2019, the company recognized $16.3 million in right-of-use assets and $16.7 million in total operating lease liabilities.