Globalstar, Inc. (NYSE:GSAT) Q3 2024 Earnings Conference Call November 7, 2024 5:00 PM ET

Company Participants

Paul Jacobs - CEO
Rebecca Clary - VP and CFO

Conference Call Participants

Walter Piecyk - LightShed Partners
Simon Flannery - Morgan Stanley
Logan Lillehaug - Craig-Hallum
Griffin Boss - B. Riley Securities

Operator

Good day and thank you for standing by. Welcome to the Globalstar Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your first speaker today, Rebecca Clary, CFO. Please go ahead.

Rebecca Clary

Thank you, operator, and good afternoon everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the Risk Factors section of Globalstar's SEC filings, including its annual report on Form 10-K for the financial year ending 2023 and its other SEC filings as well as today's earnings release.

Also note that management may reference EBITDA or adjusted EBITDA on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the Earnings Release, which is available on our website.

Before I get into the financials, I wanted to briefly touch on the deal we announced last week and closed on Tuesday, which extends the services agreement with our largest customer. As part of the updated agreement, we will provide a new network in addition to what we operate today and separate from the satellite scheduled to start launching next year.

An existing subsidiary of ours has been repurposed as a special-purpose entity to hold the new network assets. These assets will be funded by a new prepayment agreement as well as from the sale of 20% of the SPE's equity. For clarity, this is not the equity of Globalstar, Inc., the parent company. More details about these terms is provided in the 8-K we filed last week, including the elements of consideration to Globalstar as the service provider.

Moving on to third quarter financial results. Globalstar had a strong quarter driven by a 25% increase in total revenue from the third quarter of 2023, reaching a record $72 million for the quarter. Service revenue increased 28% over the same period, driven primarily by wholesale capacity revenue, including an out-of-period item totaling $7.5 million following the recognition of performance bonuses for 2023 and part of 2024. As previously discussed, the consideration under this arrangement can cause variability in our financial results.