Globalstar(GSAT) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Globalstar reported a 25% increase in total revenue year-over-year, reaching a record $72 million for Q3 2024 [6] - Service revenue increased by 28%, primarily driven by wholesale capacity revenue, including a one-time item of$ 7.5 million [6] - Adjusted EBITDA rose by 34%, with a margin of 59%, up from 55% in the prior year's third quarter [7] - The company ended the quarter with $52 million in cash and maintained a healthy leverage ratio of 2.9 times [8] - Full-year 2024 revenue guidance was raised to a range of$ 245 million to $250 million, with adjusted EBITDA margin guidance increased to 54% [9] Business Line Data and Key Metrics Changes - The company operates in various business categories, including consumer wholesale, consumer retail, government, commercial IoT, XCOM RAN, and n53 licensing [15] - Wholesale services are growing in both government and consumer sectors, with ongoing proof of concept for government customers [18] - Alpha stage testing for the complete system supporting consumer retail and commercial IoT is underway, with beta testing expected in the upcoming quarter [19] Market Data and Key Metrics Changes - The FCC approved an extension of Globalstar's existing authorization, allowing operation of up to 26 replacement satellites, enhancing its leadership in mobile satellite services [13][14] - A strategic partnership with Liquid Intelligent Technologies was announced, granting exclusive distribution rights for XCOM RAN private network 5G access solutions in high-growth markets [20] Company Strategy and Development Direction - The recent deal extends services with the largest customer and includes a new satellite constellation and expanded ground infrastructure [4][16] - The company aims to enhance capabilities in mobile satellite services and is focused on long-term shareholder value creation [17] - Strategic actions and technology developments are expected to propel the company into a new growth phase [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future, citing strong demand and growth through the first nine months of the year [9] - The company is well-positioned to meet growing commercial demand and continue providing critical mobile satellite connectivity worldwide [15] - Management highlighted the importance of their network during recent natural disasters, showcasing the critical need for communication services [12] Other Important Information - The new agreement will impact the company's financial and capital structure, including capital for the new MSS network and refinancing of existing notes [8] - The company plans to provide updates on its long-term growth strategy at the upcoming Investor Day on December 12 [10] Q&A Session Summary Question: Can you quantify the network usage during the hurricanes? - Management indicated that while they saw a significant increase in network usage, quantifying it in terms of power transmitted was not useful [26] Question: When will customer interest in the new satellite constellation begin? - Discussions regarding the new constellation have started, but specifics on capabilities and services are still being finalized [29] Question: What is the status of contracting for the new satellites? - The company is already working on the new satellites, but specifics on vendors and timelines have not been disclosed [32] Question: How will the new deal impact cash flow? - The deal is funded by a$ 1.1 billion infrastructure prepayment and a $400 million sale of equity, with cash inflows expected to occur quickly during the construction period [36] Question: What is the progress on the global retail customer? - The company is upgrading capabilities as required by the customer and is in a good position to move forward, pending the customer's internal processes [45]