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 second quarter
ended June 30, 2019. For the second quarter of 2019, Global
Eagle recorded revenue of $157 million; incurred a net loss of
$38.5 million and generated Adjusted EBITDA* of $22.7 million.
“We are delivering technical innovation to our
Connectivity and Media & Content customers while driving
improving efficiency throughout our cost structure,” commented Josh
Marks, CEO of Global Eagle. “Executing for both our customers
and stakeholders is leading to a substantial improvement in cash
generation that we expect to build upon, consistent with our goal
of sustainable positive free cash flow by year-end.”
Financial Results
During the second quarter, Global Eagle drove
improved financial performance including executing on Phase II of
its cost realignment plan. Revenue of $157 million was driven
by growth in Connectivity equipment revenue, which was offset by a
decline in Media & Content revenue compared to the prior-year
period. Connectivity service gross margins of 17.5% improved
from the prior quarter due to lower bandwidth costs and improved
cost controls. Operating expenses continued to improve
primarily due to the benefits of Phase II of our cost realignment
plan. As of June 30, 2019, we had achieved 90% of targeted
Phase II savings. We are evaluating additional cost
opportunities in order to optimize our spending across all business
units. We continue to expect Phase II of our cost realignment plan,
together with revenue growth, to drive a minimum of $25 million of
Adjusted EBITDA in the fourth quarter of 2019. Upon resolution of
Boeing 737 MAX related issues, we expect to transition to positive
free cash flow on a sustainable basis.
The Company generated record cash flows from
operating activities of approximately $12 million in the second
quarter primarily due to favorable working capital dynamics.
Capital expenditures during the quarter were approximately $4
million, down more than 50% versus the first quarter of 2019.
The Company generated positive free cash flow* of approximately $8
million in the second quarter of 2019. Our strong second
quarter performance is an important step towards our goals of
significant EBITDA growth and sustainable free cash flow
generation. Free cash flow is defined as cash flows from
operating activities less capital expenditures. Note that our
free cash flow calculation includes approximately $1 million of
severance cost related to our Phase II of our cost realignment
plan.
“We are driving cultural change and process
improvements to ensure we have the most efficient cost structure in
our industry. This will take time, but our improved results
provide positive reinforcement,” said Christian Mezger, CFO of
Global Eagle. “The positive free cash we generated this
quarter benefitted from favorable working capital dynamics.
Nonetheless, we believe this quarter is a significant milestone to
achieve sustainable positive free cash flow by year end.”
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 1.1%
year-over-year despite the impact of the 737 MAX 8 grounding as
discussed below. Absent the MAX impact, Connectivity segment
revenue would have increased approximately 3.4%. Inflight
connectivity installations and activations continue at Air France
powered by Global Eagle’s Ku high-throughput satellite (HTS)
network. This is the first EMEA HTS inflight connectivity network
to provide consistent coverage throughout Europe, Russia, the
Nordics and Scandinavia, and North Africa, capable of delivering
speeds up to 500 Mbps to each aircraft cabin. The Company
also initiated engineering and certification activity for our new
EMEA inflight connectivity customer announced last quarter.
In addition, our cruise business continues to perform ahead of
expectations as bandwidth requirements grow and we realize benefits
from new contract structures.
Global Eagle has continued to innovate
customer-centered design solutions to enhance the inflight
experience. The Company is now integrating Apple Pay into its
award-winning Airtime Portal. This allows passengers to use
one-touch biometric authorized payment methods with Apple
Pay-enabled devices. For airlines, this means that passengers can
use Face Unlock and Touch ID to easily and quickly make purchases
such as inflight wi-fi access. The system has been successfully
launched with Southwest Airlines.
737 MAX 8 Impact
The Company currently expects the 737 MAX 8
aircraft in its fleet of connected aircraft to resume normal
operations in January 2020. Due to regulatory actions beyond
our control and unrelated to passenger connectivity systems, our 26
MAX-connected aircraft remained grounded at quarter-end. Our
equipment deliveries to support new MAX installations are expected
to continue while the manufacturing line remains in active
production. We 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 estimate the impact on
services revenue to be approximately $8 million, with an Adjusted
EBITDA impact of approximately $5 million. We continue to
work with our airline partners and with Boeing to mitigate and
reduce this impact, and to be ready when the MAX returns to
service.
Media & Content
During the second quarter, Media & Content
revenue was down 11.3% over the prior-year quarter primarily due to
two factors. First, content cycle timing resulted in a $2.6 million
shift in content revenue which is expected to have a positive
impact on third quarter 2019 revenue. Second, our content
distribution business declined by $1.5 million due to our decision
not to renew an unprofitable contract as we remain focused on
generating sustainable positive free cash flow. The large new
content services customer announced in March 2019 began service on
July 1, 2019. We continue to expect the segment to return to
growth in the coming quarter and to generate positive single-digit
revenue growth for the full year.
Global Eagle’s digital content supply chain
technology known as the Open™ platform is now live with
customers. Our Open™ platform optimizes workflow for the
cloud environment and tracks content from acquisition to delivery,
collecting data throughout which drives improved analytics.
The platform will enable new efficiencies and capabilities for
4K/HD content, broader content selection and greater content
customization. Customer transition is expected to occur
through year end 2020.
Operational and Strategic
Initiatives
In mid-July, the Company announced that it
completed a $40 million upsizing of its Senior Secured
Term Loan due 2023 (“Term Loan”), as well as an amendment to its
Term Loan (collectively, the “Amendment”) which, among other
things, reduced scheduled principal repayments over the next six
quarters by an aggregate amount of approximately $26 million. Net
of fees and expenses, the Amendment will result in approximately
$61 million of incremental liquidity over the next 18 months. This
supplements the Company’s approximately $49 million of
liquidity as of June 30, 2019, which includes cash and unused
revolver capacity, and further enables the Company to focus on
executing its growth 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 now expect the evaluation process to conclude by the
end of fall. Separately, the Company continues to evaluate
the potential sale of certain joint venture interests.
Second Quarter Summary
- Total revenue for the second quarter of 2019 was $157
million. Revenue versus the prior-year period was driven by
growth in Connectivity equipment revenue from additional aircraft
and marine vessel installations, which was offset by a decline in
Media & Content revenue resulting from the timing of customer
content cycles and weaknesses in our distribution as indicated
above. We continue to expect Media & Content segment
revenue to return to growth in the coming quarter and to generate
positive single-digit growth for the full year.
- Gross margin improved to 21.1% during the quarter, a 1.7
percentage point increase versus the first quarter of 2019, driven
by lower bandwidth costs and improved cost controls.
Operating expenses were $48.5 million, decreasing $3.0
million versus the first quarter of 2019 and decreasing $12.3
million versus the prior-year period. The operating expense
improvement was driven by the continued implementation of cost
savings initiatives.
- Net loss for the second quarter of 2019 was $38.5 million, up
sequentially due to increased interest expense and income taxes and
down versus the prior-year period, primarily due to lower operating
expenses as discussed above.
- Adjusted EBITDA for the second quarter of 2019 was $22.7
million, which was a 23.0% increase versus the first quarter of
2019 and a 11.5% increase versus the prior-year period. The
improvement in Adjusted EBITDA versus both periods was primarily
driven by lower operating expenses as discussed above. EBITDA
was $8.7 million for the second quarter of 2019 which is a 100%
increase over the prior-year period.
CAO Appointment
Global Eagle also announced that R. Jason
Everett has been appointed Vice President and Chief Accounting
Officer, effective on August 12, 2019. Mr. Everett brings
significant leadership experience to Global Eagle in the areas of
financial planning, accounting, budgeting, controllership, treasury
and corporate finance, primarily from his experience most recently
as Vice President, Corporate Controller and Treasurer at Webroot
Inc.
Webcast
We will host a live webcast on Thursday, August
8, 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 1,200 employees and 50
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 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;
- 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 the United Kingdom’s referendum to withdraw from
the European Union;
- 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 trade and national-security disputes between the United
States and China (which may adversely impact our ability to conduct
business in that market);
- 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, and
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, especially in light of recently publicized security
incidents affecting our industry and our systems;
- 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 and the
General Data Protection Regulation;
- 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;
- 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 recent
history of delinquent periodic filings with the U.S. Securities and
Exchange Commission (“SEC”) and our receipt of a 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 as
filed with the SEC on March 18, 2019 (the “2018 Form 10-K”).
The forward-looking statements herein speak only
as of the date the statements are made (which is the 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 six ended June 30, 2019 and 2018.
Global Eagle Entertainment Inc. |
Quarterly Consolidated Statements of
Operations |
(In thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Revenue: |
|
|
|
|
|
|
|
Licensing and services |
$ |
145,129 |
|
|
$ |
156,428 |
|
|
$ |
295,607 |
|
|
$ |
302,954 |
|
Equipment |
|
12,338 |
|
|
|
9,534 |
|
|
|
28,479 |
|
|
|
19,505 |
|
Total revenue |
|
157,467 |
|
|
|
165,962 |
|
|
|
324,086 |
|
|
|
322,459 |
|
Cost of sales: |
|
|
|
|
|
|
|
Licensing and services |
|
116,308 |
|
|
|
122,304 |
|
|
|
239,577 |
|
|
|
234,795 |
|
Equipment |
|
7,909 |
|
|
|
4,427 |
|
|
|
18,834 |
|
|
|
10,415 |
|
Total cost of sales |
|
124,217 |
|
|
|
126,731 |
|
|
|
258,411 |
|
|
|
245,210 |
|
Gross margin |
|
33,250 |
|
|
|
39,231 |
|
|
|
65,675 |
|
|
|
77,249 |
|
Operating Expenses: |
|
|
|
|
|
|
|
Sales and marketing |
|
7,365 |
|
|
|
10,877 |
|
|
|
15,614 |
|
|
|
20,492 |
|
Product development |
|
6,125 |
|
|
|
9,872 |
|
|
|
13,104 |
|
|
|
18,206 |
|
General and administrative |
|
27,161 |
|
|
|
29,799 |
|
|
|
55,141 |
|
|
|
68,235 |
|
Provision for (gain from) legal settlements |
|
25 |
|
|
|
(141 |
) |
|
|
533 |
|
|
|
375 |
|
Amortization of intangible assets |
|
7,800 |
|
|
|
10,357 |
|
|
|
15,599 |
|
|
|
20,920 |
|
Total operating expenses |
|
48,476 |
|
|
|
60,764 |
|
|
|
99,991 |
|
|
|
128,228 |
|
Loss from operations |
|
(15,226 |
) |
|
|
(21,533 |
) |
|
|
(34,316 |
) |
|
|
(50,979 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
Interest expense, net |
|
(22,329 |
) |
|
|
(19,755 |
) |
|
|
(43,606 |
) |
|
|
(35,352 |
) |
Income from equity method investments |
|
2,517 |
|
|
|
428 |
|
|
|
4,646 |
|
|
|
1,589 |
|
Change in fair value of derivatives |
|
- |
|
|
|
(655 |
) |
|
|
938 |
|
|
|
(91 |
) |
Other expense, net |
|
(105 |
) |
|
|
(673 |
) |
|
|
(284 |
) |
|
|
(347 |
) |
Loss before income taxes |
|
(35,143 |
) |
|
|
(42,188 |
) |
|
|
(72,622 |
) |
|
|
(85,180 |
) |
Income tax expense (benefit) |
|
3,317 |
|
|
|
3,722 |
|
|
|
3,447 |
|
|
|
(987 |
) |
Net loss |
$ |
(38,460 |
) |
|
$ |
(45,910 |
) |
|
$ |
(76,069 |
) |
|
$ |
(84,193 |
) |
|
|
|
|
|
|
|
|
Net loss per share – basic and
diluted |
$ |
(0.42 |
) |
|
$ |
(0.50 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.93 |
) |
Weighted average shares
outstanding – basic and diluted |
|
92,259 |
|
|
|
91,057 |
|
|
|
92,046 |
|
|
|
90,925 |
|
|
|
|
|
|
|
|
|
Global Eagle Entertainment Inc. |
Condensed Consolidated Balance Sheet |
(In thousands, except share per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
June 30, 2019 |
|
December 31, 2018 |
Assets |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
10,853 |
|
|
$ |
39,154 |
|
Restricted cash |
|
|
1,172 |
|
|
|
801 |
|
Accounts receivable, net |
|
|
91,801 |
|
|
|
97,623 |
|
Inventories |
|
|
35,378 |
|
|
|
34,649 |
|
Prepaid expenses |
|
|
5,042 |
|
|
|
9,104 |
|
Other current assets |
|
|
10,473 |
|
|
|
10,498 |
|
TOTAL CURRENT ASSETS: |
|
|
154,719 |
|
|
|
191,829 |
|
Content library |
|
|
5,065 |
|
|
|
6,966 |
|
Property, plant and equipment, net |
|
|
170,046 |
|
|
|
176,577 |
|
Right-of-use assets |
|
|
34,551 |
|
|
|
- |
|
Goodwill |
|
|
159,613 |
|
|
|
159,562 |
|
Intangible assets, net |
|
|
68,534 |
|
|
|
84,136 |
|
Equity method investments |
|
|
83,369 |
|
|
|
83,135 |
|
Other non-current assets |
|
|
27,032 |
|
|
|
14,882 |
|
Total Assets |
|
$ |
702,929 |
|
|
$ |
717,087 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
184,837 |
|
|
$ |
177,056 |
|
Deferred revenue |
|
|
10,672 |
|
|
|
7,430 |
|
Current portion of long-term debt and finance leases |
|
|
17,005 |
|
|
|
22,673 |
|
Current portion of operating lease liabilities |
|
|
4,806 |
|
|
|
- |
|
Other current liabilities |
|
|
7,560 |
|
|
|
5,032 |
|
TOTAL CURRENT
LIABILITIES: |
|
|
224,880 |
|
|
|
212,191 |
|
Deferred revenue, non-current |
|
|
252 |
|
|
|
1,116 |
|
Long-term debt and finance leases |
|
|
713,281 |
|
|
|
686,938 |
|
Long-term operating lease liabilities |
|
|
22,277 |
|
|
|
- |
|
Deferred tax liabilities |
|
|
7,702 |
|
|
|
8,406 |
|
Other non-current liabilities |
|
|
35,067 |
|
|
|
34,771 |
|
Total Liabilities |
|
|
1,003,459 |
|
|
|
943,422 |
|
Stockholders' Equity |
|
|
|
|
Common stock |
|
|
10 |
|
|
|
10 |
|
Treasury stock |
|
|
(30,659 |
) |
|
|
(30,659 |
) |
Additional paid-in capital |
|
|
816,119 |
|
|
|
814,488 |
|
Subscriptions receivable |
|
|
(597 |
) |
|
|
(597 |
) |
Accumulated deficit |
|
|
(1,085,527 |
) |
|
|
(1,009,458 |
) |
Accumulated other comprehensive income (loss) |
|
|
124 |
|
|
|
(119 |
) |
Total Stockholder's
Deficit |
|
|
(300,530 |
) |
|
|
(226,335 |
) |
Total Liabilties and
Stockholders' Equity |
|
$ |
702,929 |
|
|
$ |
717,087 |
|
|
|
|
|
|
|
Global Eagle Entertainment Inc. |
|
|
Reconciliation of GAAP to Non-GAAP Measure |
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
|
|
|
|
|
Net loss to Adjusted EBITDA
reconciliation |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Net loss |
|
$ |
(38,460 |
) |
|
$ |
(45,910 |
) |
|
$ |
(76,069 |
) |
|
$ |
(84,193 |
) |
|
|
Interest expense, net |
|
|
22,329 |
|
|
|
19,755 |
|
|
|
43,606 |
|
|
|
35,352 |
|
|
|
Income tax expense (benefit) |
|
|
3,317 |
|
|
|
3,722 |
|
|
|
3,447 |
|
|
|
(987 |
) |
|
|
Depreciation and amortization |
|
|
21,525 |
|
|
|
26,789 |
|
|
|
43,477 |
|
|
|
50,035 |
|
|
|
EBITDA |
|
|
8,711 |
|
|
|
4,356 |
|
|
|
14,461 |
|
|
|
207 |
|
|
|
Depreciation and amortization from equity method
investments |
|
2,161 |
|
|
|
2,359 |
|
|
|
4,294 |
|
|
|
4,779 |
|
|
|
Change in fair value of financial instruments |
|
|
- |
|
|
|
655 |
|
|
|
(938 |
) |
|
|
91 |
|
|
|
Other expense, net |
|
|
105 |
|
|
|
673 |
|
|
|
284 |
|
|
|
347 |
|
|
|
Stock-based compensation expense |
|
|
2,327 |
|
|
|
2,230 |
|
|
|
3,616 |
|
|
|
5,874 |
|
|
|
Strategic-transaction, integration and realignment
expenses |
|
5,202 |
|
|
|
5,775 |
|
|
|
9,902 |
|
|
|
8,854 |
|
|
|
Internal-control and delayed audit expenses |
|
|
2,355 |
|
|
|
3,847 |
|
|
|
5,808 |
|
|
|
17,553 |
|
|
|
Loss (gain) on disposal of fixed assets |
|
|
193 |
|
|
|
509 |
|
|
|
357 |
|
|
|
(16 |
) |
|
|
Non-ordinary-course legal expenses |
|
|
586 |
|
|
|
- |
|
|
|
1,182 |
|
|
|
- |
|
|
|
Losses on significant customer bankruptcies |
|
|
775 |
|
|
|
- |
|
|
|
1,939 |
|
|
|
- |
|
|
|
Expenses incurred in connection with grounded
aircraft |
|
|
332 |
|
|
|
- |
|
|
|
332 |
|
|
|
- |
|
|
|
Adjusted
EBITDA |
|
$ |
22,747 |
|
|
$ |
20,404 |
|
|
$ |
41,237 |
|
|
$ |
37,689 |
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
|
|
|
|
|
Cash Flow from Operations to Free
Cash Flow reconciliation |
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Cash flow from
operations |
|
$ |
12,203 |
|
|
$ |
(38,874 |
) |
|
$ |
1,972 |
|
|
$ |
(42,827 |
) |
|
|
Purchases of property and equipment |
|
|
(4,359 |
) |
|
|
(9,228 |
) |
|
|
(13,442 |
) |
|
|
(24,472 |
) |
|
|
Free Cash
Flow |
|
$ |
7,844 |
|
|
$ |
(48,102 |
) |
|
$ |
(11,470 |
) |
|
$ |
(67,299 |
) |
|
|
See “About Non-GAAP Financial Measures” above, including our
definition of Adjusted EBITDA and Free Cash Flow described
therein.
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