GSAT - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to Globalstar Inc First Quarter 2019 Earnings Conference Call. My name is Sofia and I will be your operator for today’s conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. the to turn Kagan, now will call Dave over CEO. I Mr. may begin. you Kagan,

Dave Kagan

Thank thank everyone us afternoon, you, Good operator. and our XXXX to QX, you results. discuss joining for

overview remarks, will Rebecca Following financials. my provide prepared an of Clary the

that will company Harbor work and each section where As make our we and are Q&A. is to results shareholder us securities want SEC of in in provided leading call described of to formation forward-looking under us. while statements step press we've review value. full Please Tim ahead fall headed see long our Since altering to of this Factors the Globalstar’s earnings and for statements this on take today’s the plan join intended always, could that within and undertaken and forward-looking Jay contains quick Since a build Globalstar's opportunities materially medium drive focus my today’s review in opportunity Monroe up of the range strategic a prioritize flow of of I the differ we to cause board Taylor is use I filings and the the term, note and how the committee, business the time earnings the laws. Safe assets, to and how explain day, the release. call, the back first

three Beyond discuss in core below detail, we're our business areas. focused on sectors historic I'll which

increasingly business forms be IoT focus we expanded many important going believe of an on an part First, our which forward. its will in

of projects subscriber growth geographies this million which improve potential addition in dispersed our and a MOUs a on many to and transform year, of We where are commentary. opportunity number have a to we would this the can units. been committed data which satellite intent bit letter we but are There One are fundamental pursuing seeing our are that replicate our MOU opportunities project and than is needs. total the And product our assets dreams geographically reality. single cycles existing We pipe are deliver customers a projects under to completely the believe can services long such These other substantial satisfy limited for is and total X turning scale tracking or is business. considered shift double several small are could and has could to in can single on it large years a now monitoring so closing find are base of of There we projects but encouraging few into utilize substantially have requirements. trajectory. ago working have been

opportunity and a low and are reliable of we fare demand highly do simple, execute every network on we this relatively percentage Our meets to just determined hungry to work than of data some We deliver. basic day, cost sort large remote obtain IoT massive come of to IoT. in share more the And will projects. much

Secondly evolving accretive for our EBITDA. is customers. and a offerings. are in us in wireless addition satellite several highly a to which working that their as we interested serving to for is with for facilitator who wholesale other backbone IoT conceptually capacity are structure and A IoT own parties way related, is in new

connectivity markets these with will offering organizations satellite have focus opportunities while that to penetrate others cash capacity excess allow accelerated on flow for We timeline. drive on will with will us larger capacity, an we wholesale

in deploy and on of LTE. number non-exclusive a are moving spectrum our we parties Thirdly, a private initially basis forward with to

and these arrangements, solutions. private to secure contracted sell letter spectrum the of a Some to licensed implement who required intent asset MoU a already will are LTE others of Under forward; and partners teams or are phases. large these provide have relationships sales we

sharing the agreement partner providing and working broader focus networks, mining building ecosystem. our commercial deployments in device and devices a such closely chip of of secure licensed variety which of Under and on and course companies and have DoD, with markets end-user require agriculture, infrastructure property We and of Nokia we with are LTE for for and NGOs, are one all MOU, revenue including private others spectrum. Airspan transportation, and private certain both being and a negotiated. enterprise, are others Qualcomm support government,

the spectrum being We for also tested mid in band significant Band here. continue is over spectrum testing with a geography who is XX our and would Licensed, a lease critical applications US. prospective partner well-positioned the

carriers will globally. continue the but cable, partnerships spectrum with and ways to leasing, also the with companies wide nation ecosystem we're work as proceeding monetize tech spectrum other that for and develops, in to We

continued We also have international approval making efforts. our progress spectrum in

the proceedings partners By countries This have continents. of certainly year, approval so authority international regulatory million, are of giving terrestrial spectrum the on a quite significant ultimate moving across NPRM quarter most actually in both through we have similar population with bodies total converging. In progress goes XX assets range nature company's but we looking massive capacity. the between XXX are one regulatory relationship like structures to we our advanced and with of cases, for for vision received customers and are satellite both the end have wide terrestrial more guidance. or a My and and million and

and for into in potential promise include years three These provide come to legacy as opportunities partnerships opportunities robust reality. transactions a the are evolve our segments, both to business which pleasure smaller it's sky We of large will and and expanding plus as ground. the the Globalstar utilize rapidly that combine the to capacity one-off of on see pursuing possible much and

organization. and lines focus satellite main to track let's our along core It's internally of for business. structure me business Now frame shift we our helpful to the the how performance

of devices retail and personal our our XX% life-saving First, SPOT represents tracking subscribers.

sat including fix Sat-Fi represent products XXXX voice our though our products Second, revenue. and phones XX% Duplex out XX% over and of satellite out XXXX, data

our little Third, of the SmartOne of including the out lines, important developed this which market business this data providing products materially market has bit trackers representing our our have legacy IoT has that commercial bit years. accelerated. technology little It's products and been for subscriber success of little bit note to services embraced base. our in data Recently, commercial a product tracking and rate XX% IoT our line has

line SmartOne Solar growth our been ago. since sales subscribers revenue Our of to with significant drive of received and Overall, sold we one in first product XX% latest entire the in up the units well products year IoT launch of just XX,XXX excess have has year-over-year XXXX. its quarter continue SmartOne

the new large Our traction to additional spending the with products for and internally on core our To opportunities these talent development on penetrate are solutions further a growth meaningful both management area business. sales largest is pipeline experiencing and of for further we've to we're appropriate research in our and markets. capitalize requiring hiring and IoT committed IoT and efforts, enhanced partners

we new Given design two-way the way provide the products, commercial range core focused revenue years to and manufacture utilizing IoT a success miniaturizing expect in drive We're growth. currently a smaller our existing we've many enjoyed process satellite service network. of provide we're over subscriber and foundation reference devices, to a resellers to of and with value-added developing on for a products to the two-way one-way technology also more significant the which cost-effective

business of to grew X% IoT by of our grew growth Duplex by The the continue increased from quarter XXXX. in due of full and the decreased revenue hotspot. revenue we We quarter by of line the overall drive first year-over-year; XXXX X% revenue XX% expected satellite SPOT to delayed as which Sat-FiX rollout first X%

additional running promotions of during in the of the second As we and third quarter, season, subscriber growth the quarters in beyond. in which the are is we peak do business consumer side significant second to and most expected summer advance years the SPOT drive

On in two we our test end the and and Sat-FiX be product the in with firmware maritime the this and for Duplex to data rolling remote year by user derivative are voice versions market now of will markets. the which are side, out enhancements

appropriately our In facility lead partners and the are we with full while the on improvement satellite in much process to the we is with process are Without opportunities lenders working before are balance us balance optimal spectrum in engaged June. and a the compromised. needs these And hired be before concluding Importantly, shareholder focused are by effort. laser our this structure secured end agreement the this to most ability focused that to properly, opportunities on of sheet and senior an amended capital would lenders. without The have refinance with for PJT us we concluding senior Plus sheet refinance actively irrelevant. concert, and the this the our of in structuring our opportunities is base. turn our process have on of manner interrelated. very balancing

We for performance. Rebecca answering a discussion I And to to working a a during our detailed transaction session. like over Q&A to over I the And forward Rebecca? very weeks. will now coming close turn be to hard your it of financial would look questions

Rebecca Clary

and good morning, Dave everyone. Thank you,

compared X% major growth drove total another to We we in total These higher equipment XXXX. to increase first and improvements all of our together revenue satellite sales XXX,XXX. generated of across business with higher the reported meaningful when our base quarter have in core lines subscriber as expanded a ARPU quarter product

as share Focusing can IOT lower new in of device revenue. quarter our was Both on governmental remain This LTM as funding. market from of is service by offset decrease recurring Simplex total engineering sales growing we the or sporadic it which legacy revenue, with often revenue increased commercial a of basis. strong XXXX XX% timing partially XX% be The churn services by represented and subscribers our an first increase driven expanded on $XXX,XXX and XX%. which by

from we not and increase growth financial Duplex have to the this contributors and services quarters. initiatives While coming the to devices SPOT generated underway of quarter, in our revenue these were sales major

over as pricing turned monthly successfully during adjusted several We even last period. we have the plans, managed average decreasing our years churn this

the significantly adjustments forward further market leader While while rollout a will currently historically our pricing penetrate services products pipeline. profitability, SPOT has to aggressive Acknowledging the been its promotions also not with activations. segment focus on and price have new pricing to ramp we in the in quality. going sacrificing be this, on of growth our love improved the

of we summer Based robust prospective will customers strategy. performing and markets products level reevaluate and and improve this and on analysis existing research and are we verticals new enter market as current geographies. our from new services pricing into from solidify promotions, our long-term the success to of We and understanding expand our want what further

expect much than rather to future we now rate. volume our growth Switching by be For equipment to driven more sales.

subscriber In equipment compared This driver of with trend total dynamic to good XX% and IOT the which in prior in a the commercial this by and increase total revenue being revenue particularly seeing when future a prior the predictor are the of We revenue. year. primary and was driven the consumer year. growth activations was is quarter, service over up equipment first revenue from

channel remained demand network elevated addition equipment IoT into a to our with products of to While first to Sales million another is continues. a of the quarter to end-users, last saw with value-added the adding new expansive path latest back-office of products development in we year. the revenue in coincide direct to XXXX expected team of increase sales as during certain these our sell level completion platform devices resellers. commercial of to as for our Also fill allowing contributing $X.X XXXX releases of market our IoT

our retailers also big-box for addition partners robust We of family Dick's expanded network recent of including SPOT products distribution Sporting have the Goods. several through Amazon of and our

infrastructure XXXX increase income including into capitalized expect also increase to including during company's The income in contributed greater accelerate net the with reported to and decreased upcoming we to spending underlying our million we We stock the EBITDA net prior covered higher April due in movement reflects this in during We first through growth the calculate non-cash lower the sales elevated to assumptions in quarter discretionary decrease strongest Certain ground interest efforts reduction detail. in in in into depreciation and revenue. of lower various year's This turning product as as an our price expenses quarter. the development these placed devices selling of gains. SPOT our total future generation X% inputs XXXX. primarily offset liquidity. second a due gain Dave part relationships level quarter promotions operating invested due And in values of a items head service being to decrease in now as the our season. to coupled derivative Adjusted non-cash and $X.X derivative used to lower

$XX We restricted the principal to payments account facility is retain interest our continue to reserve in which under debt agreement. longer-term service million BPI making and

Our operating business. the cash an million cash include flow unrestricted primarily current cash sources and generated $XX of of from balance is

expect will months. insufficient obligations We our be these that next liquidity service over XX the fund to sources debt

much in in maintain covenants. on principally our will on obligations include the depend second needs, financial amount primarily our The raise by the and of to order business payments Focusing the $XX capital the expect interest June principal facility, we also capital Under our million. is of via with the to in this compliance this current of agreement how cure quarter. exact cure mechanism EBITDA terms generated

relatively business is on a the and the is generally variable. amount spend spend but small to support expect initiatives, also CapEx timing various to discretionary We

exploring requirements. are alternatives to funding our financing currently address various We

possible and have process, discussions avoids with underway. of and excited terms we formed collectively provide Globalstar the their the ensure advisor strategic through regarding are We financing dilution we initiatives growth that our value long-term all progress from form senior engaged to in process to parallel, are equity In our forward work. about unnecessary full the conclusion, of and agreement, to a guide to look existing lenders In the on committee. support when an updating a financial We is and are potential important has the appreciate of us in that a facility are investors a solution. management capital this perspective, appropriate. review that from raised working our our This team any recently amendment diligent

execute We will compete as to are many our well-positioned available opportunities us. and on continue believe to we the to on grow we business fronts

to requirements Q&A. to With on continuing will financing. our addressing turn We confident I over that also to the our execute look are for the in to focus few ability forward and next liquidity operator over weeks call the our

Operator

our And from first Instructions] from comes [Operator Cantor. question Jason Bernstein

JasonBernstein

Thanks for question. the guys. Hi, taking

have open at the follow-up in, have the question So and in sent March for guess Verizon as comments request of a Any you a upper band C rulemaking upper around I an C- of end well. a lot that the to potential band. I spectrum and

DaveKagan

the provided that regarding something proceeding participating that's in. actively So we're We comments in X.X.

to that you at Authority that terrestrial So that those for comments. very proceeding I a two stay are Those going would going active X.X important and I significant. that pretty how have in recommend in the look that that it and We're obviously not take incredibly X.X. certain there timeline the this potential front both it very but active. think are are C opportunities and to in, bands plays at out the on point us. be And out we're to Exactly plays

JasonBernstein

it it? others And that at be would your this is Or point? and something explore you the approach any with partnering doing CBA own taking like to you're

DaveKagan

as strategy, coalition a going we've is it to it as I number what comes lessons we to is good alone processes a that's think to, one. like of building SEC intend And the and related learned do. clear a a not it's good very that

JasonBernstein

LTE think X.X in we've about the networks? clarify whether And Can is talking the opportunity sort and a in Follow of there's the past about potentially spectrum one you're applicable in to I to Is about it Dave's licensing talked people that's lot an up press you could. more, if that US the private lately that on but the spectrum? and here. comments the been I

JayMonroe

settings about Wi-Fi with world and or also in people our Jay. buildings going. in their to used And something different an is exactly several alternatives right important Wi-Fi, wirelessly flavors lot now other different but those have or that few operate which That's are that a lot and in another the to still need there Hey, There ago a unlicensed LTE gets called use generally industrial driven is to alternative. what Private office largely in listed it of People businesses places is private are around and quasi and CBRS their need don't to Airspan given a private LTE. long difficult some confusing, States. it is have was terribly and move strategy is long, that where of press private operator. it are CBRS is and LTE of places market that so a SaaS operate through transient. the and areas LTE. United Dave is has licensed. in very operates, in time around of And long, want still and cases resource licensed, quasi talk the where Jason. segments have third-party clients is the Nokia we're I substantial This that a to want in compromised and way realized becomes mean in it but realized we only it which spectrum, extremely it in of

other and spectrum that that of just option use vagaries subject is was those is I Globalstar describing. all The to like spectrum to not

going and they're and And opportunity these have now see number LTE inside to into for private into four provide of So who owners. X going close clients for States to in deals CBRE we clients building the that to and looking the cutting are commercial instance million. buildings. in into that coming owners, which something buildings building office inventory going And buildings United et enterprises at large building cetera us,

we're a in do focused way can tech cable and a because outside. to want So no building implicates might you with it what you on those do or opportunities carrier

agricultural LTE complicated. to really And industrial it's go market it's whether or doubt here or building a private a the after. It's it's not without a whether stay. want -- that carriers is whether it to it's So it's

through why parties work to have have which arrangements with these third parties. third You we are

again QoS, traditional reliability private always when of that requirements that bit customers type something something the that its wanted bring that to we've in in opportunity well this -- differentiator real security, to that's network. Band real the And to and benefit is lines guarantee we-- a compromising we our It's where opportunities that need massive their the do really not plays really And LTE little and along so XX ability the QoS. do.

Operator

Our comes Morgan from Stanley. from next question Flannery Simon

UnidentifiedAnalyst

looking QX. just question, kind that I for on also your Duplex Hi. those share segments? out how Simon. color there launches anything SPOT there any subscribers Is XXXX outlook at your for is quick in you a This product can And is and Alexis expectations? for metrics the for checks or subscriber that share of had on can on you versus in

RebeccaClary

Sure. Thanks question, Alexis. the for

first and and to was focus Duplex on be enhancements hardware X and We churn subscriber our knew expectations. of bug and of that the case for in internal firmware So excess SPOT adding activations declined quarter functionality. fixes as in going gross improvements met we actually internally Bluetooth

we So while lot the of kind pushed really devices on just we're of those a have didn't products, improving market. being into focusing

turn that So the side, something that on. certainly to more second but that SPOT the half focused turn probably we're in around in -- both I will on that expect materially cases XXXX of it's

Dave in initiatives have We as both to and several underway alluded scripted our remarks. I

Operator

comes from Hartnett question from Jack Quadrant Capital. next Our

JackHartnett

least. quarter, Hi, agree -- -- another you could a engaged things arrangements to mentioned The last morning. right? you're you good few I a at the Rebecca, few that -- in speak financing

the quarter-to-quarter I change and some what issuance that is of I comply going spoke to all solutions to fundamental from and agreed necessary the think mind, here change. We rather is to fundamental seem covenant. we this incremental question to opposed to stock just as really answering You than be

on So if please? could expand you that

RebeccaClary

Jack. Certainly, Yes.

teams flexibility. we that want every We continue more management want So this go markets want to to We more, the every on focus day, more months. six don't to to have and our don't overhang. runway

working longer-term, we're the interest We're permanent for So we balancing we're just solution more and with. to the definitely, June solve the of we're not looking all a stakeholders payments. looking

in in we Our lenders flexibility our and to possible. us we us opportunities. that avoid to but and make going focus dilutive. the appreciate that on much in want terms terms facility do the his again other as do to shareholders the that But can to something don't remarks, that June. as to of try detail facility runway, existing XXX% of scripted under have amend requirements we payment so agreement require balancing provide certain And that that we're discussed obligations Dave would

review for committee focused on every helpful can supportive single has this strategic So been incredibly process. promise you I day, this and our

We financial advisors. have excellent

we in nothing due So guaranteed, outcome this successful going be that while course. to is think are I in

JackHartnett

Okay.

is --you've somebody this Just our a of quick spectrum, working area as on with of can in that's part the the I'm being is the MOUs are to working here terms the are the case? with also or precarious slowness with follow-up. another executed, Understanding Is listing the Is from about our the I that assuming that--is leading and this the slower, that --you slowness coming slowdown situations. working speak of Memorandum financial in [grade] got the because

DaveKagan

long-term say a problem and would depending have large focused certainly are and resolving it's short-lived far some the minds like on who can look focused in If --as tell with. is not a we're we, the back to said, quarter. very effort comes But, be their as, as on this it going a definitely quarter as on opportunities and this believe. far by going corporation, we of basis I cases is into lot Rebecca a uncertainty I

we into related seeing those. wouldn't of XX year. with to get so think as and to cadence entering deliver where I we where the specific are liquidity. specific market and got XGPP anything normal the And are MOUs end would just the So the Band was from That I just that's Look, say to us equipment our more that prevented we it's those now. now we are opposed really --I that to development key last a technology at the required to

JayMonroe

actually rapidly. is make agreements another a entered I'll of point. lot we have that very that one And into

that with user private XGPP and to companies are up was see hence it'll show in things user knowing Dave consumer would So of approval up that arrangements be Nokia to with coming will there others, the as will said. show but Airspan now our And that certainly also us and are approval behind the us band kickoff and infrastructure, in setting those that there a so stuff all all and now. now And going LTE familiar classes appear equipment. forth. with in phones there's to There's you equipment. stuff mean two industrial we're I it's in of that like

on mentioned So the size one scope change we significantly into well. Letters very on relationships those speaking in in accelerated we same third those that as the pickup parties entered near of such the Globalstar. his can of mean have we're actually satellite that are and are the LTE Dave those of couple agreements of Similar side, that private of have Memorandum the involved term in these satellite pace and the them, with into I of being remark we Understanding. that entering are to side that the relatively sizable in Intent

I in XXXX. most the concerned think about We'll are watched to question, Rebecca the financing financings parties explained, because way solve picking is going on financing it. So And but since frankly our routinely we're up. solve that not happen a everything they've it

it's a concern concern less want bigger is as stressed viewed a with of from your good outside take conversation financing, band. if but but concern, not to the if maybe we of now that's happening when advantage the with on the been XGPPP as so approved AT&T, less of to have be companies just that And happening a it's

JackHartnett

Okay.

So signing MoU, let's you've spectrum I'm to our lot to the with the got-- sign I'm go with And of be understand assuming you'll to MOU, if that's has more hearing probably as what strength. it table more another here. much has do I answer an the able say success it more-- a financing

JayMonroe

Well, that to don't spectrum financing not, is to effort. lining want sure. see certainly it's things up use I it's signed our people helpful to definitely whether these positive It's but having the know it for is helpful

DaveKagan

learns own I business they'll it's to clearly us, going plan the -- But too potential on And think before satellite that is clearly financeable. lender important in note its the just a you forward. as opportunities comfort the certainly operating as great have core about

at questions. this point more I no have Okay. guess we

issues we'll So we on liquidity we're in going mean, here before us. all them I'll the just certainly as focused look, we've -- hope to remarks. of soon And say as positive resolve have coming I couple to as possible. laser We're weeks. closing said the news

that seeing are day on spectrum the delivering about focused We also enormous growth We IoT initiatives on our the and about a side. the every talked lot on growth we're on and front. IoT the the And side Duplex improving the on side. revenue and on as, a existing those our both working products as well SPOT as said for Rebecca possibilities products,

to much. we're I Q&A deliver on to at think very you what End we're certainly and have ahead Thank lies we do. all here Globalstar excited about going what of

Operator

gentlemen. Thank you, conference. Thank concludes participating. you This today's for and ladies

now may You disconnect.

Globalstar (GSAT) 2 May 192019 Q1 Earnings call transcript