10-QPeriod: Q3 FY2020

Globalstar, Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:GSAT

Summary

Globalstar, Inc. reported a net loss of $24.9 million for the third quarter of 2020, compared to a net income of $21.1 million in the same period last year. Total revenue for the quarter decreased by 15% to $32.8 million, primarily driven by a decline in service revenue. This decline was influenced by a reduction in average subscribers for Duplex and SPOT services, and lower ARPU for Duplex and SPOT services. The company's financial performance was impacted by the ongoing COVID-19 pandemic, which affected customer demand, particularly in the oil and gas sector, and led to increased receivables. Despite the net loss, the company maintained adequate liquidity for the next twelve months, supported by cash on hand and potential warrant exercises, though it continues to monitor financial covenant compliance. Despite the revenue and net income downturn, the company highlighted an increase in engineering and other service revenue due to higher contract volumes. Subscriber equipment sales saw a modest increase driven by new product launches in the SPOT family. Operating expenses decreased overall, attributed to lower cost of services, subscriber equipment sales, and marketing, general, and administrative expenses. However, the company faces ongoing risks related to the pandemic's impact on its operations, supply chain, and customer payment capabilities, with particular concern around maintaining compliance with debt covenants.

Financial Highlights

39 data points
Beta

Revenue

$32.76M

Net Income

-$24.95M

-76.2% Net Margin

EPS (Diluted)

$-0.15

Total Assets

$910.51M

Cash & Equivalents

$19.48M

Free Cash Flow

$14.83M

Financial Statements
Beta
Revenue$32.76M
SG&A Expenses$10.06M
Operating Expenses$47.39M
Operating Income-$14.63M
Net Income-$24.95M
EPS (Basic)$-0.15
EPS (Diluted)$-0.15
Shares Outstanding (Basic)111.35M
Shares Outstanding (Diluted)111.35M

Key Highlights

  • 1Q3 2020 net loss of $24.9 million, a significant decrease from a net income of $21.1 million in Q3 2019.
  • 2Total revenue declined 15% year-over-year to $32.8 million, primarily due to a decrease in service revenue.
  • 3Duplex service revenue decreased 22% and SPOT service revenue decreased 9% year-over-year, influenced by lower subscriber counts and ARPU.
  • 4Engineering and other service revenue increased significantly, driven by higher volumes of service contracts.
  • 5Operating expenses decreased by 6% year-over-year, largely due to reductions in cost of services and marketing, general, and administrative expenses.
  • 6The company reported $19.5 million in cash and cash equivalents and $54.9 million in restricted cash as of September 30, 2020.
  • 7Globalstar continues to monitor its ability to comply with financial covenants on its debt facilities, noting potential impacts from COVID-19.

Frequently Asked Questions

Globalstar reported a net loss of $24.9 million for the third quarter of 2020, a substantial shift from a net income of $21.1 million in the same period of 2019. Total revenue decreased by 15% to $32.8 million, largely due to a decline in service revenue across key product lines like Duplex and SPOT.

The COVID-19 pandemic has adversely affected Globalstar's business by reducing demand for its products and services, particularly from customers in the oil and gas sector. This has led to lower sales of subscriber equipment, challenges in collecting outstanding receivables, and concerns about potential impacts on revenue and the ability to maintain compliance with debt covenants.

As of September 30, 2020, Globalstar had $330.1 million in long-term debt, a decrease from $464.2 million at the end of 2019, primarily due to the conversion of the Loan Agreement with Thermo into equity. The company reported $19.5 million in cash and cash equivalents and $54.9 million in restricted cash. Management expects its liquidity to be sufficient to cover obligations over the next twelve months, but continues to closely monitor its ability to comply with financial covenants, especially in light of COVID-19 impacts.

Yes, Globalstar noted an increase in engineering and other service revenue, driven by a higher volume of service contracts. Additionally, revenue from SPOT equipment sales saw an increase due to the launch of new products like the SPOT X® and SPOT Gen4™. The company also experienced a decrease in overall operating expenses.