Welcome to the Q1 2018 Globalstar, Inc. Earnings Conference Call. My name is John, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note the conference is being recorded. And I’ll now turn the call over to Jay Monroe, CEO.

Good morning, and thank you all for joining us for the Q1 2018 earnings call. One quick thing before we start, I’d like to congratulate Rebecca Clary on the recent birth of her child and look forward to her return. Since she is on maternity leave now, Tim Taylor will join me on the call to discuss current quarter financials. Also, until we file our merger-related S-4, we’ll have to limit our Q&A to the satellite business. Tim and I will participate in answering any questions on that subject after the prepared remarks. Our press release includes reconciliations to U.S. GAAP of any non-GAAP financial measures that we mention today. Please note that today’s earnings call contains forward-looking statements intended to fall within the safe harbor provided under the security laws. Factors that could cause the results to differ materially are described in the forward-looking statements section of Globalstar’s SEC filings and in today’s press release. 2018 has already been a busy year for the Globalstar team. Adjusted EBITDA growth has continued to be strong, up close to 40% as compared to the same quarter in 2017. This was accomplished prior to any contribution from new products and from new services. Last month, we released our new SmartOne Solar product, which is used for remote asset tracking where changing batteries is either impossible or not economical. I’m very pleased with the markets’ initial reception. We have partnered with a major wireless carrier and GLOBECOM on this product, and we are currently delivering 10,000 units, with the potential to deliver many thousands more for one of the world’s largest oil and gas firms. This deal shows how useful our MSS products and services are for a variety of the evolving IoT applications. We have also released the long-awaited Sat-Fi2 product, which…

Thank you, Jay, and good morning, everyone. The first quarter of 2018 saw continued momentum in our core MSS business, with revenue up 17% when compared to the first quarter of 2017. Total service revenue increased $4.5 million or 21%, resulting from growth in all of our primary revenue streams. Duplex service revenue, which was up 16%, was driven primarily by an $8 increase in our ARPU offset in part by a 6% decrease in average subscribers. Despite lower churn in Q1 2018 when compared to the prior year quarter, gross activations declined due to fewer legacy Duplex devices available in inventory for sale. Throughout the first quarter and prior to the launch of Sat-Fi2 in April, the company was focused on selling equipment at higher service plan offerings. Our continued focus on driving long-term service revenue has clearly had a positive impact on our operating results as measured by the increase in the company’s adjusted EBITDA, which I’ll cover in a minute. SPOT service revenue increased 25% during the first quarter of 2018, due primarily to an 18% increase in ARPU. The ARPU increase reflects higher average pricing plans across our subscriber base as we implemented new bundled offerings, providing simplified but higher rate plans. Similar to Duplex, our SPOT subscribers are activating on higher price plans compared to one year ago, and our legacy subscribers are also renewing on these higher rates. Also driving the increase in SPOT service revenue was a 5% increase in average subscribers as our activations over the past 12 months have remained strong. The increase in service revenue was offset partially by a decrease in revenue generated from subscriber equipment sales. This was primarily driven by the decline in the volume of Duplex sales during the first quarter. We reported net income of…

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] And our first question is from Jim McIlree from Chardan Capital.

Yes, thanks a lot and good morning. The satellite operations have obviously improved tremendously over the past few quarters. Just wondering, if there is a lot more to go or if you think you’re kind of at the level where you’re, I don’t want to say done, but closer to being done in terms of improving margins or growing the top line?

Jim, let me make a couple of points on that. First, no, we’re nowhere near done in that business. And we are just releasing those products that I described a moment ago. And one of them, the Solar product has sold 10,000 units right out-of-the-box to the company that I was describing. We also have Sat-Fi2 and SPOT X that are just about to hit the marketplace. Those will extend the marketplaces for our customers to different products with different utilizations, and I think it’s just tremendous opportunities there. Importantly though, there are whole new segments, that we’re attacking now including the connected car, which I briefly mentioned. There are many different aspects of the connected car, and people think about it primarily from the perspective of autonomous driving, which, of course, is a super high bandwidth application. But how that occurs and the other elements coming off of a car that allow you to navigate are actually a series of opportunities for Globalstar. So there are number of things that we’re going to pursue, several that are not even on the near-term horizon, but everything that I just mentioned is. So we anticipate a growing business over the next several years. No question about it.

Okay, great. That’s very helpful. And then on the merger, do you need FCC authorization for this or are there license transfers of any sort that you need to get to navigate through the [indiscernible]?

Jim, all of that will be carefully spelled out in the S-4 and I think we have to wait until that goes out in the marketplace. It will be a major document with an enormous amount of detail. So we encourage you to hold that question until after that comes out, and then we’ll be happy to elaborate.

Okay, great. Then we’ll reconnect at that time. And then lastly, on Duplex subscribers, Duplex sales. Tim, you mentioned that Duplex hardware sales were either down or lower than you had expected, I’m not sure which you used. But can you just give a little bit further clarity on what’s happening with the Duplex business inventory of old equipment, et cetera?

Sure. That is mainly driven by the number of total Duplex phones that we have in inventory. We’ve been closely controlling that number over the past two years or so. And we’ve been waiting for the release of Sat-Fi2, which is our new Duplex product. So in the meantime, when you are dealing with limited inventory, the best decision for us long term is to maximize the service revenue with that limited inventory. So we’ve been selling at plans that are far and excess of what we had previously, three and four years ago. So the baseline plan for Duplex phones is now $100. And so when we materially increase the price in the short term, we have experienced a decline in the total number of new equipment sales as you would expect. However, those subscribers offer increased long-term value. And I think we’ve managed that inventory very well. But I don’t expect that to continue. Now with Sat-Fi2 in the market, I think that the Duplex growth will ramp back up.

Okay. Great. And the inventory of the old Duplex phones, is that almost completed or you still have substantial amounts left?

It’s almost completed, but it’s actually rising, because we continue to buy back phones and sell refurbished phones for those subscribers that may have demands for Duplex in a way that Sat-Fi2 does not meet their demands. So it’s slightly rising month after month, but that is not a sustainable trend. We may get a few thousand, but it’s not a material amount overtime and we’re going to be making a full transition with Sat-Fi2.

Okay. And as you make that transition to Sat-Fi2, would the overall churn rates increase? Is that a reasonable expectation?

We’ll see. I’ mean, we don’t have guidance on churn. I think that for the most part, we’re selling to the same type of subscriber with a higher quality piece of equipment and higher quality service on new second-gen – on a new second-gen network. So I don’t expect to the extent there is any increase in churn. I don’t think that it’s going to be material. We think that it would be in line with historical averages and hopefully less than that.

Okay, great. Well, that’s it for me. Thanks for everything. Congrats on the deal and the results. I think I’ve said it before how I’ve been surprised how well are you needed to improve the constellations, operations. And we’ll speaking in soon. Thank you.

Thank you, Jim.

Our next question is from Jonathan Chaplin from New Street Research.

Hey guys, it’s Vivek on for Jonathan. Just a quick one here. It seems like you’re positioning Thermo as an investment company. I think a lot of folks on the calls have understand that GSAT business pretty well and have thoughts about its value. But maybe you could just talk about your track record as an investor maybe in another fields that folks are less familiar with? And then maybe comment about what the sort of opportunity set looks like going forward?

Okay. I think I can do that without straying into too much on the merger itself. Look, Thermo has been around since the mid-80s. And we kind of operate under four general concepts. We want to manage assets and companies ourselves. We want to invest in hard assets. We have permanent capital. And we want to invest in industries that are undergoing paradigm shift or regulatory changes or other macro trend that provides a long-term opportunity for us to invest and manage. So when you go all the way back to the beginning, the start of Thermo in the mid-80s took advantage of a big regulatory change that was happening in the energy markets. This was the Energy Act from the days of Jimmy Carter, which among other things provided for people to sell electricity back to utilities under certain circumstances. And so there was a macro trend of energy deregulation, which affected the power industry, natural gas industry, oil industry and several other things, but a true macro long-term cycle. We had another cycle that we have ridden for a long time, and that was real estate in the urban core. The whole move of people in the United States back into cities and revitalization of urban cores is something that we saw coming. And we did a significant amount of that in a couple of major metropolitan areas. I think the third biggest trend on that we have ridden, and is probably the subject of the future for Thermo for the next several years, is increasing data and telecom deregulation, and just to move to 5G. So those are the three macro trends that we, as a company, have been able to invest in, whether it’s energy assets or real estate in urban areas or the things that…

Got it. Thanks, Jay.

You’re welcome.

[Operator Instructions] Our next question is from Simon Flannery from Morgan Stanley.

It’s Spencer for Simon. Thanks for taking the question. There has been a lot of recent excitement around the C-band. I think you guys have 60 megahertz on shared spectrum in the 5 gigahertz range and then maybe another sort of 60, above 60. So how are you thinking about the C-band assets and the monetization opportunity there?

Spencer, obviously, this is a spectrum band that we have talked about from time to time. The way that the notice of information is formatted at the SEC right now, includes our band. But we are watching that NOI process carefully or observing what’s taking place with other parties to it. And we have not been exceedingly active in it up till now. It, of course, is an opportunity for us, though a very, very long-dated opportunity and something that we hope is in our future, but it’s not in our present.

Okay. And then on the international front, are you expecting any more approvals this year?

Well, we’re continuing to work in all of those jurisdictions. And as we have said in the past, we have a team of people working in different regions of the world, different teams for different regions. And those conversations go on daily. Those of you who know the company, know that Barbee is on the road constantly, trying to mature those up. Hopefully, that – they’re serious of them, they don’t take quite as long as it took us in the FCC to get to finality. And – but – and I believe that many of them won’t. The critical question, of course, is when you have such an authority, how do you utilize it? All of which again, is very, very long dated and just takes a while. The upside exists from the operations in these places around the world without a doubt. But it’s, again, it’s that same broad trend that I was talking about a moment ago. And telecom is certainly not restricted to the shores of the United States, I mean, the growth is everywhere. But how fast it occurs, how meaningful it is in the short term to profitability remains to be the seen, but we’re certainly working on it every day.

Okay, great. Thank you.

I’ll turn the call back over to Jay for our closing remarks.

Great. Listen, I appreciate everybody joining the call this morning. And we will file an S-4 and look forward to having another call after that goes out so that we can explain it in a ton of detail, but I think, it probably answers a million questions that people have, some of which they may not even know that they have yet. So we’ll prompt others and we look forward to going through that in a lot of detail. And we’ll get it filed as promptly as we possibly can. Now thank you all for joining today. Appreciate it.

Thank you, ladies and gentlemen. That concludes today’s conference. Thank you for participating, and you may now disconnect.