Globalstar, Inc.

and thank you for standing by. Welcome to the Global Star fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rebecca Clary, CFO. Please go ahead.

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 GlobalStars SEC filings including its most recent annual report on Form 10-K 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. I'll begin today by sharing our fourth quarter and full year 2024 results. I'll then turn it over to Paul, who will cover key business updates. Before I get into the financials, I am pleased to share two strategic actions we have recently completed. In an effort to enhance our stock's liquidity and marketability, we successfully completed our uplifting to the NASDAQ Global Select Market earlier this month. This milestone represents a natural evolution for GlobalStar and aligns with our strategy to increase our visibility within the investment community. In connection with our transfer to NASDAQ, we implemented our planned 1 for 15 reverse stock split, which serves multiple strategic purposes. This action realigns our outstanding shares to more normalized levels relative to our peers and optimizes our trading fundamentals through improved liquidity. Importantly, our post-split shares now meet institutional minimum stock price requirements, potentially broadening our investor base. For modeling purposes, our current common shares outstanding are approximately $126.4 million. Tomorrow, we plan to file new and amended registration statements to, among other things, reflect the impact of this split. You can also find more information related to the split in our February 7th 8K filing. Now turning to our results, beginning with the fourth quarter. Total revenue increased 17% to $61.2 million, compared to the prior year period of $52.4 million. Service revenue increased 18%, driven primarily by wholesale capacity revenue. Additionally, commercial IoT increased 8% during the quarter due to an increase in both average subscribers and ARPU. We are pleased to see continued adoption of our IoT services. Fourth quarter adjusted EBITDA increased 21% to $30.4 million compared to the prior year period of $25.1 million. Adjusted EBITDA margin also increased from the prior year period due to higher revenue of $8.8 million which was offset partially by an increase in operating expenses of $3.5 million. Turning to our full-year results, total revenue for the year increased 12%, reaching a record $250.3 million and exceeding the top end of our guidance range. Service revenue increased 16% year-over-year, driven primarily by wholesale capacity and our second full year of providing service under this contract. Additionally, we saw record annual service revenue from our commercial IoT business in 2024, which is a testament to the growth that we are seeing with existing and new customers due to the wider variety of new use cases that have expanded our addressable market. As Paul will discuss, we look forward to expansion of our product offerings this year with the long-awaited launch of a two-way device as announced yesterday. In 2024, we achieved record annual adjusted EBITDA of $135.3 million, a 16% increase year-over-year. From a margin perspective, adjusted EBITDA margin was 54%, up 190 basis points from 52% in 2023. Moving to our balance sheet, we ended the year with $391.2 million of cash on hand. Cash hires from 2024 were impacted significantly by the updated services agreements. Since the closing of these agreements in November of 2024 through the end of the year, the company has received a total investment from its customer of $913 million, including cash payments totaling $689 million and certain in-kind asset contributions. The cash payments included the proceeds from the sale of 20% equity in the GlobalStar SPE subsidiary, the proceeds from the current debt repayment that were used to pay off the 2023 13% notes, and certain advanced service payments under the infrastructure prepayment. A portion of the cash payments received was used to fund capital expenditures for the extended MSS network. The remaining amount of approximately $320 million was held in cash and cash equivalents as of December 31, 2024, and will be used in 2025 to fund infrastructure for the extended MSS network. We expect additional advanced service payments under the infrastructure prepayment to continue through the duration of the construction and launch of this new network. This activity is more fully disclosed in our November 1st and 7th 8K filings and in our 10K, which we plan to file with the SEC tomorrow after the markets close. Now turning to our guidance, which we announced at our Analyst and Investor Day on December 12th. For 2025, we are expecting revenue to be between $260 million and $285 million, representing 9% year-over-year growth at the midpoint, and an adjusted EBITDA margin around 50%. Our forecasted adjusted EBITDA margin reflects short-term compression driven by strategic investments to support long-term growth initiatives, primarily relating to further development of our EXCONN RAN terrestrial solution and expansion of our MSS product portfolio. During the analyst day, we also reiterated a long-range forecast reflecting the updated services agreements. During the first full year of service provided over the extended MSS network, we expect total revenue to double the 2024 amount, reaching $500 million, and to generate robust margins in excess of 54%. This forecast excludes certain key growth opportunities that are too difficult to forecast with precision, such as large terrestrial spectrum and XCOM RAN deployments. However, this in no way means we are not confident in their future contributions. I want to emphasize that these targets factor in our expectations regarding market position, growth drivers, and operational capabilities. In just over two years, our wholesale capacity partnership has transformed GlobalStar with a series of significant planned network investments. These investments provide us with a foundation to deliver sustainable increased earnings while we position the company for future growth. We believe we have the right strategy and execution capability to deliver on these commitments while creating sustainable long-term shareholder value. Additionally, this outlook underscores several key themes. First, our ability to consistently deliver strong top-line growth while maintaining healthy margins. Second, our disciplined approach to balancing growth investments. And finally, our confidence in the expanding market opportunities ahead of us. With that, I'd like to turn the call over to Paul.

Thanks, Rebecca. It's great to be on the call with all of you today. I'm very pleased with our strong performance in 2024 and the recent progress we've made on commercial and operational basis. So I'll start off with a high-level review and then update on those topics before providing an overview of our expectations for 2025. First, I'll just say it was great to be back at NASDAQ a few weeks ago to ring the opening bell, and this really signifies a new stage for GlobalStar. I've obviously been there and experienced many milestones at NASDAQ as actually shown by pictures on the walls and some innovations that have been involved in developing and that's now in the museum. And we added a Global Star satellite model into the NASDAQ museum. And so this event really marked another moment that our team can be proud of. It's clear to me that Global Star is very well positioned in both the satellite and terrestrial connectivity markets, both of which present significant growth opportunities for the company. We've invested billions of dollars in the satellite business, and we're happy to say that hundreds of millions of devices can connect to our satellites, and that number continues to grow both for our wholesale and our direct businesses. Until now, GlobalStar's 500,000-plus deployed active units have only been able to support one-way tracking and telemetry applications. So we could do tracking around the world very well, but lack the ability to communicate back to the device for command applications. And I'm proud that our refocused product development team, whose hard work under new leadership has enabled us to deliver the full two-way satellite commercial IoT solution. We have an extremely low cost structure, which leverages the investments in our wholesale business. And with our time-tested uplink and our new state-of-the-art downlink, We intend to aggressively compete for subscribers in markets that already exist and are ripe for disruption. We believe that our globally licensed L and S bands offer a unique asset to anyone looking to deliver connectivity. Our dedicated Spectrum resource, which is almost 4X that of any other D2D player currently, and our bent pipe architecture differentiate GlobalStar. Everyone else has to borrow Spectrum or put up more or larger satellites to match where we already are. and we're not standing still. It's an exciting time in D2D. We've been a leader in the space with our transformational deal, and we'll continue to innovate. And of course, with any new technology that's rapidly evolving comes a lot of speculation, so I just want to take the opportunity to address a few inquiries we've received. First of all, we've been in development with our wholesale customer since long before other providers made their direct-to-sell announcements. We made the first commercial D2D service Years ago, we've been successfully operating it since that time with progressively improved features. We believe that speculation about the capabilities of other services has been overstated. No other direct-to-cellular service provider is currently supporting hundreds of millions of devices with years of experience operating at commercial scale, and none have deployed outside the U.S. across contiguous bands. While it's early days for others, we're in development for our next constellations. We've extended our initial contract with our customer, funding a significant investment for new and improved satellite constellations. The structure of our relationship is one in which we pre-sold certain capacity, and our revenues are unaffected by utilization, except, of course, the extent that additional satellites may be needed to provide increased capacity or capabilities in the future. As for the speculation around the regulatory landscape and the potential for sharing our spectrum, I just want to say that we've been at this for a long time. GlobalStars worked successfully with various administrations for over 25 years, and these systems take years to plan and operate for decades. And there are now hundreds of millions of consumers globally who have access to life-saving and convenient connectivity through our constellation. Our spectrum is being actively used to provide these and other important services available globally. And that's what regulators want to see, and the regulatory landscape has fostered a wave of innovation in the satellite industry. As recent announcements have shown, there is no lack of competition in the provision of direct cellular services. We provide mission-critical connectivity that saves lives, and we continue to launch new technologies using our spectrum. Our bent-pipe satellite architecture is uniquely suited to enable the rapid deployment of new innovation, and the certainty of our spectrum position for over 30 years has enabled us and our customers to make billions of dollars in investments in satellites, ground networks, and research and development. We believe we're well positioned with our arrangement, with our wholesale capacity customer, and with the current and future growth opportunities. Our unique financial arrangement provides network funding, enabling us to create valuable capacity solutions at a very competitive price point. Even with our spectrum advantage and wholesale agreements, we do remain considerably smaller than certain of our direct competitors, and we're working to close that gap and are now well positioned to do so aggressively. Now the terrestrial side of the business. GlobalStar's band N53 and XCOM RAN capabilities present partners with valuable, mission-critical applications and connectivity solutions that are high-performance and reliable. The XCOM RAN team has met every technical milestone put in front of them and have continued to develop technologies that will allow us to better serve our customers. We're believers in the future of automation in both consumer, industrial, enterprise, and defense environments, and all benefit from connectivity solutions that we are well-suited to deliver. Also, the BandN53 ecosystem has advanced with XCOM RAN and other technologies and ready to generate cash. We're expanding the sales force both internally and externally to push both BandN53 and XCOM RAN out into the world and expect to make tangible progress this year. Now to update on some of the projects we've discussed. First and very importantly, we detailed in our November 1st Form 8K an updated service agreement with our wholesale customer which demonstrates continued investment in support of product and service development. While there are other options, our team and our assets continue to be the chosen partner. Under these updated agreements, we'll maintain 100% of all terrestrial MSS and other revenue while continuing to allocate 85% of our network capacity for satellite services to the customer across both existing and new satellites. Remaining 15% capacity will continue serving our direct MSS customers, ensuring we maintain our commitment to our diverse and growing customer base. we've achieved a major milestone in our partnership with Parsons Corporation, successfully demonstrating our software-defined satellite communications solution using our low-Earth orbit constellation. This first-of-its-kind demonstration in North America represents a breakthrough in providing mission-critical solutions for RF congested environments, particularly in the public sector and defense applications. The proof of concept initiated in early 2024 is advancing towards commercial service positioning us to capture significant opportunities in these high-value markets. As we have said, this opportunity has the potential to be a significant annual contributor to revenue and cash flow, and our confidence in it remains high. Our technology leadership continues to strengthen as evidenced by our successful completion of the first 5G data call on our band N53 spectrum, achieving impressive speeds of 100 megabits per second download and 60 megabits per second upload in 10 megahertz of spectrum. This breakthrough enables advanced applications such as robotics, autonomous vehicles, and augmented reality, while offering our partners a versatile, fully licensed channel for enhanced wireless connectivity. On the regulatory front, we enhanced our long-term operational foundation with a 15-year renewal of our blanket mobile earth terminal authorization from the FCC, ensuring continued authority to operate our mobile earth terminals with satellites throughout the United States and its territories. This builds upon the company winning terrestrial authority in Mexico earlier in the first quarter. Collectively, these developments reinforce our position as a leader in satellite communications and innovative spectrum solution, while expanding our market reach and strengthening revenue potential across multiple sectors. In summary, we believe we're well positioned to continue to execute on our long-term growth strategy. We're seeing results from investments we've made so far and are excited for 2025 and the years ahead. We've spent a significant amount of time identifying markets that we can grow in and designing proprietary solutions to address the need of customers for years ahead. Further to this, we've been increasing our team at GlobalStar with professionals that know how to win, grow, and scale businesses, and I could not be more excited about our future. And finally, I just want to thank all my colleagues at GlobalStar for their dedication and hard work in 2024. So I'll turn the call back to the operator for a Q&A, and thanks, everybody.