Globalstar Announces Results for Second Quarter 2012 - Company Reports Continued Improvement in Adjusted EBITDA
- Globalstar Inc. reports positive Adjusted EBITDA for the third consecutive quarter and a substantial increase over the second quarter of 2011
- Continued deployment of its second-generation constellation and expects network performance to continue to rise significantly as additional new satellites become operational
- Settled prior disputes with Thales Alenia Space and agreed to the principal terms for the purchase of six additional satellites
- Gained 42,000 activations during the second quarter 2012 – the most gross subscriber additions during a quarter in the Company's history
Globalstar reported revenue of $20.0 million for the three months ended June 30, 2012 compared to $19.0 million for the three months ended June 30, 2011. The primary driver of the revenue increase was SPOT service revenue, which grew by $1.6 million, or 33%, for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. As expected, Duplex service revenue was lower in the second quarter of 2012 compared to the same period in 2011, but increased by approximately 7% from the first quarter of 2012. The Company anticipates further Duplex revenue growth later this year as additional second-generation satellites are placed into service.
Call connection rates in key markets continue to increase as new second-generation satellites were placed into service during the quarter. The Company anticipates placing additional second-generation satellites into service during the third quarter of 2012. These additional satellites should increase call connection rates to approximately 95% in some key markets by the end of September. The Company expects increasing service levels to drive both usage and new subscriber additions for its Duplex business.
Revenue from subscriber equipment sales for the three months ended June 30, 2012 was $5.8 million compared to $5.6 million for the three months ended June 30, 2011. The Company experienced large sales volumes in the second quarter of 2011 due to the release of new SPOT products in early 2011. Simplex equipment sales increased 21% due to continued success of the Company's commercial applications for M2M asset monitoring and tracking.
The Company reported a net loss of $27.5 million for the current quarter, compared to a net loss of $14.1 million for the three months ended June 30, 2011, an increase of $13.4 million. This increase was due primarily to the $22.0 million termination charge recorded related to the arbitration with Thales, reduction in the value of long-lived assets of $7.1 million related to an adjustment made by the Company to the carrying value of the constellation, and an increase of $3.1 million in depreciation expense, offset by an increase in a noncash derivative gain of $16.6 million.
Globalstar reported positive Adjusted EBITDA of $2.9 million for the three months ended June 30, 2012compared to negative Adjusted EBITDA of $2.0 million for the three months ended June 30, 2011. This represented an increase of $4.9 millionover the second quarter of 2011. The improvement in Adjusted EBITDA resulted from an increase in revenue of $1.0 million and a decrease in operating expenses of $3.9 million(excluding EBITDA adjustments1). The decrease of approximately 23% in operating expenses was due largely to the implementation of a more focused business strategy, as well as the continuation of operational improvements and streamlining initiatives introduced in late 2011. The Company reported expense reductions in the quarter throughout all of its major operating areas.
The Company continues to see consecutive quarter over quarter growth in Adjusted EBITDA. This increase from the first quarter of 2012 to the second quarter of 2012 exemplifies the Company's sustainable cost discipline, while leveraging improved coverage rates as the constellation continues to be deployed.
"Overall we are pleased with the results for the quarter. Revenue and Adjusted EBITDA for the quarter continues to be in line with our expectations," saidJay Monroe, Chairman and CEO ofGlobalstar, Inc."We are also pleased to have settled our arbitration with Thales and look forward to a strong partnership with them moving forward. As we place new second-generation satellites into service, our customers will experience significantly improved service quality and we expect to experience positive Duplex revenue growth later this year."
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