Good day, and thank you for standing by. Welcome to the Globalstar Fourth Quarter 2022 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jay Monroe, Executive Chairman.

Thanks for joining Globalstar's fourth quarter and full year 2022 investor call. 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 forward-looking statements and risk factors section of Globalstar's SEC filings, including its annual report on Form 10-K for the financial year ended 2022 and in last week's earnings release. It's been some time since our last earnings call, and we're pleased to be back at it. We have been busy developing, executing, and announcing a long list of critical developments in the interim involving our spectrum, wholesale services, powerful, long-term partnerships, and so much more. We also provided a full update and presentation during our Investor Day in November and plan to host similar events when the time is right. On this call and on future earnings calls, we plan to keep our prepared remarks comparatively brief, hitting the highlights for the prior periods and moving directly to Q&A. Today, Dave Kagan, Rebecca Clary, Kyle Pickens, and Tim Taylor will be available to answer your questions. As has been our policy even before September 17th announcement, we will not be able to answer questions about our wholesale business partner or any of their future services. Instead, we will focus on the other aspects of our business. But what we can say is that the September announcement is the foundation of the company's wholesale satellite plan. We will continue to execute our own satellite opportunities, utilizing our retained capacity, including finalizing the work at 3GPP for our new NTN band class, which we expect to finish this September. Standardization with NTN allows for the proliferation of chipsets and devices able to operate on both satellite and terrestrial networks, greatly increasing the total addressable market for satellite connectivity. We will do this while maintaining the unique satellite assets which we operate today through fully licensed and protected spectrum in the L, S, and C bands. This wholesale business strategy allows Globalstar to generate contracted, consistent cash flow for the future, which will grow materially as new satellite assets are deployed in the coming years. We are close to announcing a new and exciting partnership to help utilize our available satellite capacity. On top of our wholesale effort, our core MSS business generates annual revenue in excess of $100 million and is anchored by the legacy SPOT and Duplex businesses. As we had expected and as we have experienced, the major growth driver for our MSS core business is Commercial IoT, which will soon benefit from the introduction of our very first two-way IoT product launching later this year. We continue to believe in this significant growth opportunity and have appropriately added to the team to help close sales. Our terrestrial spectrum assets have continued to develop well with two major announcements in just the last week. First, the successful completion of terrestrial authority for Band 53 in Spain, our first in Europe, which should foreshadow many more licenses there. Spain represents the 11th national authorization across four continents. Secondly, yesterday, we announced our new collaboration with Qualcomm. As additional national authorizations are secured, we view this as an increasingly borderless spectrum resource. The strategic agreement with Qualcomm introduces Band 53 into the full Qualcomm RF ecosystem and sales network, including both the chipset and the front end. This is important for rapid adoption of the small cell infrastructure for private wireless 5G networks. Qualcomm calls this the FSM platform, and its availability will substantially increase the number of radio vendors rolling out Band 53. The FSM is expected to be introduced this summer. Qualcomm will also encourage the use of Band 53 via their global mobile chipset business, the world's largest, so that the widest range of new smartphones, laptops, and other 5G devices will be enabled with Band 53 and offered globally. The agreement with Qualcomm further positions Globalstar to monetize our spectrum across multiple commercial channels. Partners will be able to access these products through a rapidly expanding ecosystem with Globalstar and Qualcomm jointly working through Qualcomm's global network of system integrators to offer Qualcomm's suite of solutions for Band 53. Together with these SIs, Globalstar can deploy spectrum in support of new 5G network solutions in the U.S. and in any other country where we have or obtained terrestrial authority. This announcement represents a continuation of the company's effort to expand the Band 53 ecosystem following the initial agreement with Qualcomm to support us in their prior Snapdragon modems. We are in negotiations with terrestrial users representing hundreds of millions of dollars of annual spectrum leases for Band 53. On the financing front, we are pleased to sign the agreements we did last week, which were announced in the 8-K, and this was accomplished without dilution. We are currently working to complete the conditions precedent, including the refinancing of the remaining first-lien facility in the very near future. With an improved capital structure and accelerating cash flow, Globalstar shareholders are well positioned to realize the value of the opportunities at hand. Concluding my remarks today, 2022 represented a significant improvement in the company's financial results, including revenue increasing 19% and adjusted EBITDA increasing 48%. The Commercial IoT growth is accelerating, and we believe this growth will accelerate again with the introduction of our two-way module later this year. Entering the two-way market will close the gap versus competitive alternatives and allows us to attack a large existing market with an established OEM distribution channel. This is a massive opportunity for Globalstar, and we will continue evolving our IoT products and service offerings as IoT connectivity becomes more and more critical across industrial use cases. We will now open up the call to Q&A, including the availability of Dave, Rebecca, Kyle, and Tim. Please direct questions to whomever you prefer. We remind you that we are not able to answer questions related to our activities in the direct handset market. We thank you in advance for focusing your questions on the other part of our business and our financial results.

Our first question comes from Simon Flannery with Morgan Stanley.

I was wondering if you could just talk to your prior 2023 guidance and any more updates or color you can provide to that? And particularly, any comments around CapEx and comments around free cash flow, to what extent the revenues will be coming out of your deferred revenue balance versus new additional cash inflows?

Sure, Simon. It's Rebecca. So our 2023 guidance that we issued in September and reaffirmed, I believe, in the third quarter earnings release in November, we still feel confident about that revenue range of $185 million to $230 million. There's nothing that has changed that would have impacted those projections from the prepay agreement that we signed last week. So CapEx, though, has changed, obviously. So now we're committed to funding about $250 million of the CapEx for the new satellite through primarily operating cash flows. And so that will be funded over the next couple of years. On the favorable side, we are saving quite a bit of interest by not having to raise $500 million of senior debt at astronomical rates, as you guys know. So depending on the assumptions, we're saving upwards of $150 million over the construction period. But again, offsetting that from a cash flow perspective, we're spending $250 million more in CapEx. That is a timing issue just in terms of the repayment of that CapEx investment will come to us over the Phase 2 service period after those satellites are launched. So again, it's an upfront investment and just the timing of cash flow issue.

And anything on what your revenues, how you use the deferred revenue balance this year? Is that going to grow this year or decline?

So we still have to do a little bit of study in the gas to figure out how the new prepayment will work as far as that will be deferred revenue or debt classification on our balance sheet. But regardless, it will turn into revenue when we earn it over the Phase 2 service period. Now the $94 million that we received in prior years, that is sitting in deferred revenue, that will be recognized over the service period that started in November.

Right. And it's been about a year since you signed the deal with MDA to build a new constellation. Could you update us on the progress on the manufacturing of the satellites? And I think you said before delivery and launch by the end of '25. Is that still looking good?

Yes, I'm happy to go ahead, Tim.

So we've been working on the contract, the one-year anniversary was a few weeks ago. So we're a little over 12 months into it. A major milestone in the first year of the construction contract is the completion of PDR, which is the preliminary design review. That happened a few months ago. That's the initial design leading up then for a period of about eight months or nine months until you get to the critical design review. So we're on schedule, on budget and lined up well for launches in 2025.

Great. Good to hear. And then just one last one. The FCC seems to be taking an active interest in the satellite terrestrial intersection. Could you just talk about how you see what's being proposed as Globalstar's positioning relative to competitors?

Yes, I can take that. Generally speaking, Simon, there are a number of changes that are going on in the industry right now, and everybody is watching those. And so the FCC will have to address a series of regulatory issues related to that. Obviously, Globalstar is a heavy user of all of its satellite spectrum, especially under our new arrangements. So it's unlikely that we will have any direct action that I think will survive the FCC process if someone wants to mount something to utilize ours. But generically, there are changes that will happen in the industry over the next year or so that the FCC will have to wrestle with. For instance, how will SpaceX and T-Mo deal with their spectrum questions in front of the FCC, and there are a number of those. So we anticipate ongoing discussions that will take place and ongoing regulatory proceedings, which, of course, we're extremely cognizant of every single day. Given that we have globally harmonized spectrum, our issues will be, I think, issues that are not settled only within the FCC context, but more our 25-year history of operating on a global basis and, therefore, in front of the ITU for a lot of cases.

Our next question comes from George Sutton with Craig-Hallum Capital.

Jay, during the Analyst Day, you mentioned the possibility of reaching a significant agreement with a new partner by year-end. You seemed to reinforce that point this morning. Can you provide us with an update on the progress of this partnership and what we can expect moving forward?

George, you likely saw one or two updates in the past week. We are actively working to expand our terrestrial presence, with Spain being a key component of this strategy. We plan to move forward across Europe with additional authorizations. This groundwork is essential for rolling out terrestrial services. Additionally, we are working on various types of relationships that are still in progress, including leases for terrestrial spectrum and new business models for our satellite capacity. We mentioned some of these developments during our Investor Day, and some have already come to fruition. We anticipate more progress in both terrestrial and satellite initiatives in the near future.

Got you. And perhaps next question is best for Rebecca. But the refinancing of the first lien facility, can you just give us a sense of how that's being marketed or what the structure we should be expecting from that to be?

Sure. So we've been working with Goldman for quite a few months. It's a challenging environment, as you guys know. I know it's taken a little bit longer than some of you would like. But as we demonstrated last week, we're obviously having the shareholder value as our most fundamental priority and if it takes more time to get it done, we're going to take more time to get it done. They were a few days away from this upcoming deadline. But hopefully have some faith in it. While we are not prepared to make an announcement right now as far as the tax form or size or timing, just know that we're working every day on it, and we've got options at the table that we think are favorable to the company and we hope to announce something there.

Fabulous. And last, Jay, the concept of borderless spectrum is quite unique. What are the best types of use cases that you would suggest?

So go ahead, Kyle.

Yes, hi George. I believe there are several large multinational companies with operations in different regions where we hold terrestrial rights. Our partnership with Qualcomm will enable us to reach these companies with a solution that integrates seamlessly across their operations. This should appeal to various industries, including OEMs, major equipment manufacturers, mining firms, and transportation sectors. In the past, we've discussed that the terrestrial opportunity could be worth several hundred million dollars annually in potential lease revenue. We believe the Qualcomm agreement we announced yesterday significantly advances our progress in this area. Previously, we talked about the steps needed to make terrestrial spectrum deployable, and this agreement, along with Qualcomm's efforts, represents a crucial final step in developing the ecosystem. We're eager to see how quickly we can grow now that we will soon offer a comprehensive solution. I'm considering how to handle the influx of opportunities, whereas until now, our focus has primarily been on building the ecosystem to reach this point.

Our next question comes from Mike Crawford with B. Riley Securities.

Just to continue on that last topic in the earlier statement that you're in negotiations on hundreds of millions of terrestrial spectrum leases. Can you break that out, that opportunity out by geography?

Jay, do you want to take that or you want me to take it?

No, go ahead, Kyle.

There are numerous opportunities in different stages of negotiation, and while I prefer not to provide specifics, reaching hundreds of millions of dollars would likely involve the United States but could also have a global aspect. These opportunities collectively amount to a significant sum, but I'm unable to share detailed information at this time.

Given your ongoing satellite operations with Band 53, is leasing really necessary? Are there discussions about the possible sale of the spectrum? Could you continue operating your satellite business if that happened?

Well, it's hard for us to sell the spectrum in kind of the traditional sense. There are lots of different ways that leases can be structured, but all of the conversations are around leasing the spectrum.

So Anterix likes to qualify its pipeline in terms of three stages, kind of early, middle, and final stage. Is there any clarification of that sort you could do?

Yes, it's difficult for us to provide that information right now. We often feel as though we're nearing the end of a situation, only for it to drag on, which can lead to disappointment. We operate in 11 different countries and have a complete ecosystem. There are numerous opportunities in front of us, but I don't want to get too specific about our pipeline status.

Okay. And then just to switch topics. So now that you've finished the preliminary design review of the constellation, can you share any of the characteristics of what kind of power output, throughput capacity capabilities you'll be expecting from the replacement constellation?

Yes. Unfortunately, Mike, we won't get into too many of the specifics there. We have said that the main point of launching the satellite is for the continuation of service and that we were not ever planning on taking any major technical risk. So beyond that, though, the specs and all details of the satellite's payload and testing that's not something that we're going to be discussing at this time.

Our next question comes from Jason Bernstein with Cantor.

I have a couple of questions regarding the recent Qualcomm news. Can you clarify whether there is a revenue opportunity with Qualcomm? Will they be promoting the ecosystem and generating potential revenues from that? Or do customers purchase the small cell ecosystem and then approach Globalstar to lease the spectrum? I think this may be a question for Kyle.

Qualcomm has been developing a comprehensive solution for private networking for some time. They see the ability to access spectrum resources across borders as very appealing. Their engineering team is focused on ensuring the chipsets function correctly and that devices and radios are compatible. After that, they will collaborate with us. Qualcomm, being a large company with a global presence, will approach their system integrator partners with a complete solution that includes spectrum and all necessary equipment for any private network deployment. These system integrators will coordinate with us on individual agreements for licensing and leasing. Our revenue will come from different parties, rather than Qualcomm. Qualcomm will generate revenue through equipment sales, while we will earn lease revenue from the connections they facilitate.

Got it. And one more question. In the 10-K, there's a statement about the Germany and larger satellite constellation applications being accepted by the ITU. When you mention the larger satellite constellation that we have today, are you referring to the 17 satellites MDA is working on, or is this about a future constellation that we haven't explored yet?

We have no comment on that one at this time.

And this concludes the Q&A session. I'd now like to turn the call back over to Jay Monroe for any closing remarks.

Thank you all for joining today. We appreciate the attendance from investors, analysts, and others, and look forward to doing this again. As always, we are available for follow-up questions. For those who asked questions today and want to go deeper, and always, of course, talking to our investors anytime you want to reach out to us. Thank you very much for joining. We look forward to doing it again soon with more important news. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.