Global Eagle Entertainment Inc. (Nasdaq: ENT) (“Global Eagle,” the
“Company” or “we”), a leading provider of media, content,
connectivity and data analytics to markets across air, sea and
land, today announced financial results for the third quarter ended
September 30, 2019. For the third quarter of 2019, Global
Eagle recorded record revenue of $170 million; incurred a net loss
of $41.3 million and generated record Adjusted EBITDA* of $25.4
million despite the headwind due to the Boeing 737 MAX grounding.
“We are excited about generating record revenue
and Adjusted EBITDA during the third quarter,” commented Josh
Marks, CEO of Global Eagle. “We are building a culture of
continuous improvement that is positively impacting our results. We
achieved our goal of $25 million of Adjusted EBITDA a quarter
earlier than our guidance. Our third quarter performance
highlights our success balancing product innovation with meaningful
improvements in our cost structure.”
Financial Results
During the third quarter, Global Eagle continued
its significant improvement in financial performance. Record
revenue of $170 million was up 3.6% over the prior-year period
driven by 170.4% growth in Connectivity equipment revenue led by
increased aircraft installations. Our revenue growth was
partially offset by an intentional decline in distribution revenue
within the Media & Content segment as the Company continues to
exit unprofitable business activities with unfavorable cash flow
profiles. Gross margin improved 1.3 percentage points sequentially
driven by the improvement in Media & Content gross
margin. Media & Content gross margin improvement was
mainly driven by higher revenue due to the timing of content
refresh cycles and the initiation of a large new content service
provider (CSP) customer. Net loss was $41.3 million for the
third quarter. Adjusted EBITDA of $25.4 million increased
37.7% versus the prior-year period. With our Phase II cost
savings initiatives successfully implemented, we have identified
Phase III cost initiatives that we plan to implement in the first
half of 2020. Our Phase III initiatives will target business
process reengineering and procurement initiatives. We continue to
expect to generate a minimum of $25 million of Adjusted EBITDA in
the fourth quarter of 2019. We expect to transition to
positive free cash flow on a sustainable basis upon the return of
the Boeing 737 MAX. As of September 30, 2019, the
Company had approximately $68 million of liquidity which includes
cash and unused revolver capacity.
“Our improved financial performance, evident in
our third quarter results, is mirrored by operational improvements
throughout our organization. We plan to build on this
foundation in 2020,” said Christian Mezger, CFO of Global
Eagle. “I am particularly enthusiastic about the progress we
continue to make toward generating free cash flow on a sustainable
basis, and with Phase III actions identified, we are confident we
can achieve this milestone in 2020 independent of Boeing 737 MAX
service re-entry.”
Connectivity
Global Eagle’s Connectivity segment is a leading
provider of satellite-based passenger connectivity for single-aisle
airliners and broadcaster of live television to aviation and
maritime markets. Connectivity segment revenue was up 6.5%
year-over-year despite the impact of the Boeing 737 MAX grounding
as discussed below. Inflight connectivity installations and
activations continue at Air France powered by Global Eagle’s Ku
high-throughput satellite (HTS) network. We operate the first EMEA
HTS inflight connectivity network to provide consistent coverage
and up to 500 Mbps throughput in Europe, Russia, Scandinavia, and
North Africa. The Company has also now executed the service and
equipment contracts with our previously announced new connectivity
customer, Turkish Airlines.
Boeing 737 MAX Impact
Based on current information, the Company
expects the Boeing 737 MAX aircraft in its fleet of connected
aircraft to resume normal operations in the first quarter of
2020. Due to regulatory actions beyond our control and
unrelated to passenger connectivity systems, our MAX-connected
aircraft remained grounded during the third quarter. We continue to
forecast that MAX program issues will impact services revenue,
including both Connectivity and Media & Content revenue, by
approximately $3 million per quarter, with an Adjusted EBITDA
impact of approximately $2 million per quarter. For the full
year 2019, we continue to estimate the impact on services revenue
to be approximately $8 million, with an Adjusted EBITDA impact of
approximately $5 million. We remain focused on working with
our airline partners and with Boeing to be ready when the MAX
returns to service.
Media & Content
During the third quarter, Media & Content
revenue was up 0.6% over the prior-year quarter primarily due to
two factors. First, our CSP business grew $6.2 million driven by
new customers, including the large new CSP customer that we
announced in March 2019. Second, we continued to
intentionally exit certain unprofitable activities in our
distribution business with unfavorable cash flow profiles, which
had a $5.7 million adverse impact on revenue in the third
quarter.
Global Eagle’s digital content supply chain
technology platform, branded Open™, is now active. We will continue
to transition customers onto Open™ throughout 2020. Our Open™
platform is unique to the industry and optimizes workflow for the
cloud environment, tracks content from acquisition to delivery, all
while collecting data throughout to improve analytics. To
date, Open™ has delivered 250,000 media assets to airlines.
The platform will enable new efficiencies and capabilities for
4K/HD content, broader content selection and greater content
customization.
Phase III Cost Savings
Initiatives
In the third quarter, the Company began planning
its Phase III cost savings initiatives. Phase III will target
business process reengineering and procurement initiatives across
all business units. Implementation of the initiatives will
begin in early 2020. These savings are expected to benefit both
cost of sales and operating expenses. We will provide
additional details regarding the amount and timing of our Phase III
cost savings initiatives on our fourth quarter 2019 earnings
call.
Strategic Initiatives
The Company continues to work with its financial
advisor, Barclays Capital Inc., to evaluate offers for all or a
portion of the non-aviation components of our Connectivity
business. We continue to expect the evaluation process to conclude
by the end of year. Separately, the Company also continues to
evaluate the potential sale of certain joint venture interests also
by the end of year.
Third Quarter Summary
- Total revenue for the third quarter of 2019 was $170 million,
up $5.9 million or 3.6% versus the prior-year period. Revenue
growth was driven by increased Connectivity equipment
installations, new CSP customers including the initiation of a
large contract. Revenue growth was partially offset by a
decline in Connectivity service revenue resulting from the Cruise
contract reset in the fourth quarter of 2018, and a $5.7 million
decline in Media & Content distribution revenue as the Company
continues to exit unprofitable business activities with unfavorable
cash flow profiles.
- Gross margin improved to 22.4% during the quarter, a 1.3
percentage point increase versus the second quarter of 2019, driven
by Media & Content gross margin. Media & Content
gross margin improved mainly driven by two items: higher
revenue levels associated with the timing of content refresh cycles
and new customers including the initiation of a large new CSP
customer.
- Operating expenses were $54.0 million, increasing $5.5 million
versus the second quarter of 2019 and decreasing $3.0 million
versus the prior-year period. Operating expenses were
impacted by $5.6 million related to the provision for legal
settlements and $2.1 million of non-ordinary course legal fees
including related to settlements. Excluding these costs,
operating expenses improved on a sequential basis and relative to
the prior-year period driven by the implementation of our Phase II
cost savings initiatives earlier in the year.
- Net loss for the third quarter of 2019 was $41.3 million, up
sequentially due to an increased provision for legal settlements
and non-ordinary course legal fees including related to settlements
as discussed above. Net loss was down versus the prior-year
period, due to higher revenue, improved gross margin and lower
operating expenses partially offset by higher interest expense and
income tax.
- Adjusted EBITDA for the third quarter of 2019 was $25.4
million, which was a 11.5% increase versus the second quarter of
2019 and a 37.7% increase versus the prior-year period. The
improvement in Adjusted EBITDA versus both periods was primarily
driven by higher revenue and gross margin discussed above.
EBITDA was $7.7 million for the third quarter of 2019 and includes
the adverse impact of $7.7 million consisting of $5.6 million
related to the provision for legal settlements and $2.1 million of
non-ordinary course legal fees including related to
settlements.
Webcast
We will host a live webcast on Thursday,
November 7, 2019 at 5:00 p.m. EDT (2:00 p.m. PDT). We will
make the webcast and an accompanying slide presentation available
on the Investor Relations section of our website at
http://investors.geemedia.com/events-and-presentations. We
will maintain an archive of the webcast on our website for 30 days
following the event.
About Global Eagle
Global Eagle is a leading provider of media,
content, connectivity and data analytics to markets across air, sea
and land. Global Eagle offers a fully integrated suite of rich
media content and seamless connectivity solutions to airlines,
cruise lines, commercial ships, high-end yachts, ferries and land
locations worldwide. With approximately 1,100 employees and 35
offices on six continents, the Company delivers exceptional service
and rapid support to a diverse customer base. Find out more at:
www.GlobalEagle.com.
Contact:
Peter A. LopezVice President, Finance and
Investor Relations+1
310-740-8624investor.relations@GlobalEagle.compr@GlobalEagle.com
* About Non-GAAP Financial Measures
To supplement our consolidated financial
statements, which are prepared and presented in accordance with
accounting principles generally accepted in the United States, or
GAAP, we present EBITDA, Adjusted EBITDA and free cash flow, which
are non-GAAP financial measures, as measures of our performance.
The presentations of EBITDA, Adjusted EBITDA and free cash flow are
not intended to be considered in isolation from, or as a substitute
for, or superior to, net income (loss), cash flows from operations
or any other performance measures derived in accordance with GAAP
or as an alternative to net cash provided by operating activities
or any other measures of our cash flows or liquidity. For a
reconciliation of EBITDA, Adjusted EBITDA and free cash flow to its
most comparable measure under GAAP, please see the table entitled
“Reconciliation of GAAP to Non-GAAP Measure” at the end of this
press release. Further, we note that Adjusted EBITDA as presented
herein is defined and calculated differently than the “Consolidated
EBITDA” definition in our senior secured credit agreement and in
our second lien notes, which Consolidated EBITDA definition we use
for financial-covenant-compliance purposes and as a measure of our
liquidity.
EBITDA, Adjusted EBITDA and free cash flow are
three of the primary measures used by our management and Board of
Directors to understand and evaluate our financial performance and
operating trends, including period to period comparisons, to
prepare and approve our annual budget and to develop short- and
long-term operational plans. Additionally, Adjusted EBITDA is one
of the primary measures used by the Compensation Committee of our
Board of Directors to establish the funding targets for (and
subsequent funding of) our Annual Incentive Plan bonuses for our
employees. We believe our presentation of EBITDA, Adjusted EBITDA
and free cash flow is useful to investors both because it allows
for greater transparency with respect to key metrics used by our
management in their financial and operational decision-making and
because our management frequently uses it in discussions with
investors, commercial bankers, securities analysts and other users
of our financial statements.
We define Adjusted EBITDA as EBITDA (net income
(loss) before (a) interest expense (income), (b) income tax expense
(benefit) and (c) depreciation and amortization), as further
adjusted to exclude (when applicable in the period) (1) change in
fair value of financial instruments, (2) other (income) expense,
including (gains) losses from foreign-currency-transaction
(gains) and from other investments, which include impairment
charges relating to our joint ventures, (3) goodwill impairment
expense, (4) stock-based compensation expense, (5)
strategic-transaction, integration and realignment expenses (as
described below), (6) auditor and third-party professional fees and
expenses related to our internal-control deficiencies (and the
remediation thereof) and complications in our audit process
relating to our control environment, (7) (gain) loss on disposal
and impairment of fixed assets, (8) non-ordinary-course legal
expenses (as described below), (9) losses related to significant
customer bankruptcies or financial distress (as described below)
and (10) expenses incurred in connection with grounded aircraft
resulting from orders, airworthiness directives and other
regulations issued by U.S. and foreign civil aviation authorities.
Management does not consider these items to be indicative of our
core operating results.
“Losses related to significant customer
bankruptcies or financial distress” includes (1) our provision for
bad debt associated with significant bankruptcies or financial
distress of our customers, (2) the costs (e.g., content acquisition
fees) that we incurred to maintain service to those customers
during their bankruptcy proceedings in order to preserve the
customer relationship and (3) costs relating to providing services
to customers for whom we recognize revenue on a cash basis due to
their financial distress.
“Non-ordinary-course legal expenses” includes
third-party professional fees and expenses and estimated loss
contingencies, provisions for legal settlements and other expenses
associated with non-ordinary-course employment, corporate and
intellectual-property-infringement disputes.
“Strategic-transaction, integration and
realignment expenses” includes (1) transaction and
procurement-related expenses and costs (including third-party
professional fees) attributable to acquisition, financing,
investment and other strategic-transaction activities (including
for new product and proof-of-concept testing), (2) integration and
realignment expenses and allowances, (3) employee-severance,
-retention and -relocation expenses, (4) purchase-accounting
adjustments for deferred revenue, costs and credits associated with
companies and businesses that we have acquired through our M&A
activities and (5) estimated loss contingencies, provisions for
legal settlements and other expenses related to claims at companies
or businesses that we acquired through our M&A activities for
underlying liabilities that pre-dated our acquisition of those
companies or businesses.
We define free cash flow as cash flows from
operating activities less capital expenditures. Free cash
flow does not represent our residual cash flow available for
discretionary expenditures, since we have mandatory debt service
requirements and other non-discretionary expenditures that are not
deducted from the measure.
Cautionary Note Regarding
Forward-Looking Statements
Certain statements in this press release may
constitute “forward-looking” statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, without limitation, statements
with respect to our expected Adjusted EBITDA, revenue and margin
growth and sustainable positive free cash flow in future periods,
our aviation-connectivity installations in future periods, the
impact of Boeing 737 MAX aircraft grounding on our financial
performance, our business and financial-performance outlook,
industry, business strategy, plans, the potential sale of certain
businesses and assets, business and M&A integration activities,
operating-expense and cost structure improvements and reductions
and our ability to execute and realize the benefits of our
cost-savings plans, international expansion, future technologies,
future operations, financial covenant compliance, margins,
profitability, future efficiencies, liquidity, ability to generate
positive cash flow from operating activities, and other financial
and operating information. The words “anticipate,” “assume,”
“believe,” “budget,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “potential,” “predict,” “project,”
“should,” “will,” “future” and the negative of these or similar
terms and phrases are intended to identify forward-looking
statements in this press release.
Forward-looking statements reflect our current
expectations regarding future events, results or outcomes. These
expectations may or may not be realized. Although we believe the
expectations reflected in the forward-looking statements are
reasonable, we can give you no assurance these expectations will
prove to have been correct. Some of these expectations may be based
upon assumptions, data or judgments that prove to be incorrect.
Actual events, results and outcomes may differ materially from our
expectations due to a variety of known and unknown risks,
uncertainties and other factors. Although it is not possible to
identify all of these risks and factors, they include, among
others, the following:
- our ability to timely remediate material weaknesses in our
internal control over financial reporting; the effect of those
weaknesses on our ability to report and forecast our operations and
financial performance; and the impact of our remediation efforts
(and associated management time and costs) on our liquidity and
financial performance;
- our ability to maintain effective disclosure controls and
internal control over financial reporting;
- our ability to execute on our operating-expense and
cost-structure realignment plan and realize the benefits of those
initiatives;
- our ability to sell certain businesses and/or assets on
favorable terms or at all, and our ability to realize the
anticipated benefits from any such sales;
- the timing and conditions surrounding the return to service of
the Boeing 737 MAX aircraft;
- our ability to properly implement the new leasing standard (ASC
842);
- our dependence on the travel industry;
- future acts or threats of terrorism;
- our ability to obtain new customers and renew agreements with
existing customers;
- our customers’ solvency, inability to pay and/or delays in
paying us for our services, and potential claims related to
payments from customers received prior to such customers’
insolvency proceedings;
- our ability to retain and effectively integrate and train key
members of senior management;
- our ability to recruit, train and retain highly skilled
technical employees;
- negative external perceptions that damage our reputation among
potential customers, investors, employees, advisors and
vendors;
- our ability to receive the anticipated cash distributions or
other benefits from our investment in the Wireless Maritime
Services joint venture;
- customer attrition due to direct arrangements between satellite
providers and customers;
- our ability to utilize our net operating loss carryforwards and
certain other tax attributes may be limited;
- the effect of a variety of complex U.S. and foreign tax laws
and regimes due to the global nature of our business;
- our ability to continue to be able to make claims for
e-business and multimedia tax credits in Canada;
- our exposure to foreign currency risks;
- the effect of political changes and developments globally on
our customers and our business (including Brexit and the ongoing
political unrest in Hong Kong);
- our dependence on our existing relationship and agreement with
Southwest Airlines;
- our need to invest in and develop new broadband technologies
and advanced communications and secure networking systems, products
and services and antenna technologies as well as their market
acceptance;
- increased demand by customers for greater bandwidth, speed and
performance and increased competition from new technologies and
market entrants;
- our reliance on “sole source” service providers and other third
parties for key components and services that are integral to our
product and service offerings;
- the potential need to materially increase our investments in
product development and equipment beyond our current investment
expectations;
- our ability to expand our international operations and the
risks inherent in our international operations, especially in light
of current and future trade and national-security disputes
(including disputes between the United States and other countries
such as China and Turkey);
- service interruptions or delays, technology failures, damage to
equipment or software defects or errors and the resulting impact on
our reputation and ability to attract, retain and serve our
customers;
- equipment failures or software defects or errors that may
damage our reputation or result in claims in excess of our
insurance or warranty coverage;
- satellite failures or degradations in satellite
performance;
- our ability to integrate businesses or technologies we have
acquired or may acquire in the future;
- increased on-board use of personal electronic devices and
content accessed and downloaded prior to travel and our ability to
compete as a content provider against “over the top” download
services and other companies that offer in-flight entertainment
products;
- pricing pressure from suppliers and customers in our Media
& Content segment and a reduction in the aviation industry’s
use of intermediary content service providers (such as us);
- a reduction in the volume or quality of content produced by
studios, distributors or other content providers or their refusal
to license content or other rights upon terms acceptable to
us;
- a reduction or elimination of the time between our receipt of
content and it being made available to the rental or home viewing
market (i.e., the “early release window”);
- increased competition in the in-flight entertainment (“IFE”)
and in-flight connectivity (“IFC”) system supply chain;
- our ability to plan expenses and forecast revenue due to the
long sales cycle of many of our Media & Content segment’s
products;
- the refusal of content providers to license content to us,
operational complexity and increased costs or reducing content that
we offer due to challenges maintaining and tracking our music
content licenses and rights related thereto, which could cause a
decline in customer retention or inability to win new
business;
- our use of fixed-price contracts for satellite bandwidth and
potential cost differentials that may lead to losses if the market
price for our services declines relative to our committed
cost;
- our use of fixed-price contracts in our Media & Content
segment that may lead to losses in the future if the market price
for our services declines relative to our committed cost;
- our ability to develop new products or enhance those we
currently provide in our Media & Content segment;
- our ability to successfully implement a new enterprise resource
planning system;
- the effect on our business and customers due to disruption of
the technology systems utilized in our business operations;
- our ability to protect our intellectual property;
- the effect of cybersecurity attacks, data or privacy breaches,
data or privacy theft, unauthorized access to our internal systems
or connectivity or media and content systems, or phishing or
hacking, on our business, our relationships with customers, vendors
and our reputation;
- the costs to defend and/or settle current and potential future
civil intellectual property lawsuits (including relating to music
and other content infringement) and related claims for
indemnification;
- changes in regulations and our ability to obtain regulatory
approvals to provide our services or to operate our business in
particular countries or territorial waters;
- compliance with U.S. and foreign regulatory agencies, including
the Federal Aviation Administration (“FAA”), the U.S. Department of
Treasury’s Office of Foreign Asset Control (“OFAC”), Federal
Communications Commission (“FCC”), and Federal Trade Commission
(“FTC”) and their foreign equivalents in the jurisdictions in which
we and our customers operate;
- regulation by foreign government agencies that increases our
costs of providing services or requires us to change services;
- changes in government regulation of the Internet, including
e-commerce or online video distribution;
- our ability to comply with trade, export, anti-money laundering
and anti-bribery practices and data protection laws, especially the
U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the
General Data Protection Regulation and the California Consumer
Privacy Act once effective on January 1, 2020;
- changes in foreign and domestic civil aviation authorities’
orders, airworthiness directives, or other regulations that
restrict our customers’ ability to operate aircraft on which we
provide services;
- our (along with our directors’ and officers’) exposure to civil
stockholder litigation relating to our investor disclosures and the
related costs of defending and insuring against such
litigation;
- uninsured or underinsured costs associated with stockholder
litigation and any uninsured or underinsured indemnification
obligations with respect to current and former executive officers
and directors;
- limitations on our cash flow available to make investments due
to our substantial indebtedness and our ability to generate
sufficient cash flow to make payments thereon, comply with our
reporting and financial covenants, or fund our operations;
- our ability to repay the principal amount of our bank debt,
second lien notes due June 30, 2023 (the “Second Lien Notes”)
and/or 2.75% convertible senior notes due 2035 (the “Convertible
Notes”) at maturity, to raise the funds necessary to settle
conversions of our Convertible Notes or to repurchase our
Convertible Notes upon a fundamental change or on specified
repurchase dates or due to future indebtedness;
- the conditional conversion of our Convertible Notes;
- the effect on our reported financial results of the accounting
method for our Convertible Notes;
- the impact of the fundamental change repurchase feature and
change of control repurchase feature of the securities purchase
agreement governing our Second Lien Notes on our price or potential
as a takeover target;
- our potential as a takeover target due to price depression of
our common stock;
- the dilution or price depression of our common stock that may
occur as a result of the conversion of our Convertible Notes and/or
Searchlight warrants;
- our ability to meet the continued listing requirements of The
Nasdaq Stock Market (“Nasdaq”), in particular given our receipt of
a second notice from Nasdaq that our stock price does not meet the
minimum $1.00 per share stock price requirement pursuant to Nasdaq
rules;
- conflicts between our interests and the interests of our
largest stockholders;
- volatility of the market price of our securities;
- anti-takeover provisions contained in our charter and
bylaws;
- the dilution of our common stock if we issue additional equity
or convertible debt securities; and,
- other risks and factors listed under “Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2018 and
our subsequently filed Quarterly Reports on Form 10-Q.
The forward-looking statements herein speak only
as of the date the statements are made as of (the filing date of
this press release). You should not put undue reliance on any
forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities
laws. If we do update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
Financial Information
The table below presents financial results for
the three months and nine ended September 30, 2019 and
2018.
|
|
Global Eagle
Entertainment Inc. |
|
Quarterly
Consolidated Statements of Operations |
|
(In
thousands, except per share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
Licensing and services |
$ |
152,520 |
|
|
$ |
157,604 |
|
|
$ |
448,127 |
|
|
$ |
460,560 |
|
|
Equipment |
|
17,369 |
|
|
|
6,423 |
|
|
|
45,848 |
|
|
|
25,927 |
|
|
Total revenue |
|
169,889 |
|
|
|
164,027 |
|
|
|
493,975 |
|
|
|
486,487 |
|
|
Cost of
sales: |
|
|
|
|
|
|
|
|
Licensing and services |
|
117,875 |
|
|
|
123,126 |
|
|
|
357,452 |
|
|
|
357,523 |
|
|
Equipment |
|
13,998 |
|
|
|
5,443 |
|
|
|
32,832 |
|
|
|
15,859 |
|
|
Total cost of sales |
|
131,873 |
|
|
|
128,569 |
|
|
|
390,284 |
|
|
|
373,382 |
|
|
Gross
margin |
|
38,016 |
|
|
|
35,458 |
|
|
|
103,691 |
|
|
|
113,105 |
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
6,675 |
|
|
|
8,989 |
|
|
|
22,289 |
|
|
|
29,499 |
|
|
Product development |
|
6,740 |
|
|
|
7,477 |
|
|
|
19,844 |
|
|
|
25,536 |
|
|
General and administrative |
|
28,275 |
|
|
|
31,620 |
|
|
|
83,416 |
|
|
|
100,384 |
|
|
Provision for (gain from) legal settlements |
|
5,555 |
|
|
|
(509 |
) |
|
|
6,088 |
|
|
|
(134 |
) |
|
Amortization of intangible assets |
|
6,778 |
|
|
|
9,447 |
|
|
|
22,377 |
|
|
|
30,367 |
|
|
Total operating expenses |
|
54,023 |
|
|
|
57,024 |
|
|
|
154,014 |
|
|
|
185,652 |
|
|
Loss from
operations |
|
(16,007 |
) |
|
|
(21,566 |
) |
|
|
(50,323 |
) |
|
|
(72,547 |
) |
|
Other
(expense) income: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(23,881 |
) |
|
|
(20,048 |
) |
|
|
(67,487 |
) |
|
|
(55,399 |
) |
|
Income from equity method investments |
|
3,130 |
|
|
|
2,022 |
|
|
|
7,776 |
|
|
|
3,611 |
|
|
Change in fair value of derivatives |
|
(6 |
) |
|
|
(196 |
) |
|
|
932 |
|
|
|
(287 |
) |
|
Other expense, net |
|
(202 |
) |
|
|
(588 |
) |
|
|
(486 |
) |
|
|
(936 |
) |
|
Loss before
income taxes |
|
(36,966 |
) |
|
|
(40,376 |
) |
|
|
(109,588 |
) |
|
|
(125,558 |
) |
|
Income tax expense |
|
4,308 |
|
|
|
2,852 |
|
|
|
7,755 |
|
|
|
1,865 |
|
|
Net
loss |
$ |
(41,274 |
) |
|
$ |
(43,228 |
) |
|
$ |
(117,343 |
) |
|
$ |
(127,423 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per
share – basic and diluted |
$ |
(0.45 |
) |
|
$ |
(0.47 |
) |
|
$ |
(1.27 |
) |
|
$ |
(1.40 |
) |
|
Weighted
average shares outstanding – basic and diluted |
|
92,737 |
|
|
|
91,408 |
|
|
|
92,279 |
|
|
|
91,101 |
|
|
|
|
|
|
|
|
|
|
|
Global Eagle
Entertainment Inc. |
|
Condensed
Consolidated Balance Sheet |
|
(In
thousands, except share per share amounts) |
|
(Unaudited) |
|
|
|
September 30, 2019 |
|
December 31, 2018 |
|
Assets |
|
CURRENT
ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,728 |
|
|
$ |
39,154 |
|
|
Restricted cash |
|
|
908 |
|
|
|
801 |
|
|
Accounts receivable, net |
|
|
99,132 |
|
|
|
97,623 |
|
|
Inventories |
|
|
31,827 |
|
|
|
34,649 |
|
|
Prepaid expenses |
|
|
3,307 |
|
|
|
9,104 |
|
|
Other current assets |
|
|
11,605 |
|
|
|
10,498 |
|
|
TOTAL
CURRENT ASSETS: |
|
|
156,507 |
|
|
|
191,829 |
|
|
Content library |
|
|
4,566 |
|
|
|
6,966 |
|
|
Property, plant and equipment, net |
|
|
158,931 |
|
|
|
176,577 |
|
|
Right-of-use assets |
|
|
34,921 |
|
|
|
- |
|
|
Goodwill |
|
|
159,591 |
|
|
|
159,562 |
|
|
Intangible assets, net |
|
|
61,754 |
|
|
|
84,136 |
|
|
Equity method investments |
|
|
81,514 |
|
|
|
83,135 |
|
|
Other non-current assets |
|
|
25,624 |
|
|
|
14,882 |
|
|
Total
Assets |
|
$ |
683,408 |
|
|
$ |
717,087 |
|
|
Liabilities
and Stockholders' Equity |
|
CURRENT
LIABILITIES: |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
186,159 |
|
|
$ |
177,056 |
|
|
Deferred revenue |
|
|
10,421 |
|
|
|
7,430 |
|
|
Current portion of long-term debt and finance leases |
|
|
16,533 |
|
|
|
22,673 |
|
|
Current portion of operating lease liabilities |
|
|
5,177 |
|
|
|
- |
|
|
Other current liabilities |
|
|
8,533 |
|
|
|
5,032 |
|
|
TOTAL
CURRENT LIABILITIES: |
|
|
226,823 |
|
|
|
212,191 |
|
|
Deferred revenue, non-current |
|
|
86 |
|
|
|
1,116 |
|
|
Long-term debt and finance leases |
|
|
736,317 |
|
|
|
686,938 |
|
|
Long-term operating lease liabilities |
|
|
22,258 |
|
|
|
- |
|
|
Deferred tax liabilities |
|
|
7,334 |
|
|
|
8,406 |
|
|
Other non-current liabilities |
|
|
30,935 |
|
|
|
34,771 |
|
|
Total
Liabilities |
|
|
1,023,753 |
|
|
|
943,422 |
|
|
Stockholders' Equity |
|
|
|
|
|
Common stock |
|
|
10 |
|
|
|
10 |
|
|
Treasury stock |
|
|
(30,659 |
) |
|
|
(30,659 |
) |
|
Additional paid-in capital |
|
|
817,771 |
|
|
|
814,488 |
|
|
Subscriptions receivable |
|
|
(597 |
) |
|
|
(597 |
) |
|
Accumulated deficit |
|
|
(1,126,801 |
) |
|
|
(1,009,458 |
) |
|
Accumulated other comprehensive loss |
|
|
(69 |
) |
|
|
(119 |
) |
|
Total
Stockholder's Deficit |
|
|
(340,345 |
) |
|
|
(226,335 |
) |
|
Total
Liabilties and Stockholders' Equity |
|
$ |
683,408 |
|
|
$ |
717,087 |
|
|
|
|
|
|
|
|
Global Eagle
Entertainment Inc. |
|
Reconciliation of GAAP to Non-GAAP Measure |
|
(In
thousands) |
|
(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
Net loss to Adjusted EBITDA reconciliation |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Net
loss |
|
$ |
(41,274 |
) |
|
$ |
(43,228 |
) |
$ |
(117,343 |
) |
|
$ |
(127,423 |
) |
Interest expense, net |
|
|
23,881 |
|
|
|
20,048 |
|
|
|
67,487 |
|
|
|
55,399 |
|
|
Income tax expense |
|
|
4,308 |
|
|
|
2,852 |
|
|
|
7,755 |
|
|
|
1,865 |
|
|
Depreciation and amortization |
|
|
20,789 |
|
|
|
24,482 |
|
|
|
64,265 |
|
|
|
74,517 |
|
|
EBITDA |
|
|
7,704 |
|
|
|
4,154 |
|
|
|
22,164 |
|
|
|
4,358 |
|
|
Depreciation and amortization from equity method investments |
|
|
2,191 |
|
|
|
2,415 |
|
|
|
6,485 |
|
|
|
7,122 |
|
|
Change in fair value of financial instruments |
|
|
6 |
|
|
|
196 |
|
|
|
(932 |
) |
|
|
287 |
|
|
Other expense, net |
|
|
202 |
|
|
|
588 |
|
|
|
486 |
|
|
|
936 |
|
|
Stock-based compensation expense |
|
|
1,744 |
|
|
|
3,918 |
|
|
|
5,360 |
|
|
|
9,785 |
|
|
Strategic-transaction, integration and realignment expenses |
|
2,837 |
|
|
|
4,259 |
|
|
|
12,738 |
|
|
|
13,113 |
|
|
Internal-control and delayed audit expenses |
|
|
2,414 |
|
|
|
2,057 |
|
|
|
8,222 |
|
|
|
19,610 |
|
|
Loss on disposal of fixed assets |
|
|
26 |
|
|
|
419 |
|
|
|
383 |
|
|
|
403 |
|
|
Non-ordinary-course legal expenses |
|
|
7,685 |
|
|
|
409 |
|
|
|
8,867 |
|
|
|
409 |
|
|
Losses on significant customer bankruptcies |
|
|
249 |
|
|
|
- |
|
|
|
2,188 |
|
|
|
- |
|
|
Expenses incurred in connection with grounded aircraft |
|
|
301 |
|
|
|
- |
|
|
|
633 |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
25,359 |
|
|
$ |
18,415 |
|
|
$ |
66,594 |
|
|
$ |
56,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
Cash
Flow from Operations to Free Cash Flow reconciliation |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Cash used in
operations |
|
$ |
(9,972 |
) |
|
$ |
(26,638 |
) |
$ |
(8,000 |
) |
|
$ |
(69,465 |
) |
|
Purchases of property and equipment |
|
|
(4,346 |
) |
|
|
(9,051 |
) |
|
|
(17,788 |
) |
|
|
(33,523 |
) |
|
Free
Cash Flow |
|
$ |
(14,318 |
) |
|
$ |
(35,689 |
) |
|
$ |
(25,788 |
) |
|
$ |
(102,988 |
) |
|
|
|
|
|
|
|
|
|
|
|
See “About Non-GAAP Financial Measures” above,
including our definition of Adjusted EBITDA and Free Cash Flow
described therein.
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