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EchoStar Announces Financial Results for the Three and Six Months Ended June 30, 2022

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Englewood, CO, August 4, 2022—EchoStar Corporation (NASDAQ: SATS) announced its financial results for the three and six months ended June 30, 2022.
 

Three Months Ended June 30, 2022 Financial Highlights:

  • Consolidated revenue of $499.3 million.
  • Net income of $10.5 million, consolidated net income attributable to EchoStar common stock of $13.9 million and basic and diluted earnings per share of common stock of $0.16.
  • Consolidated Adjusted EBITDA of $167.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
     

Six Months Ended June 30, 2022 Financial Highlights:

  • Consolidated revenue of $1,000.9 million.
  • Net income of $99.4 million, consolidated net income attributable to EchoStar common stock of $105.3 million, and basic and diluted earnings per share of common stock of $1.24.
  • Consolidated Adjusted EBITDA of $333.6 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“Once again, the EchoStar team delivered a solid performance in the second quarter,” said Hamid Akhavan, CEO and President of EchoStar.  “We are focused on optimizing operations and asset yields in order to maintain our track record of excellent fiscal responsibility, and are leveraging our engineering expertise to innovate new solutions and applications across the market segments we serve.”
 

Three Months Ended June 30, 2022 - Additional Information:

  • Consolidated revenue was flat year over year.  Higher equipment sales of $16.1 million to our domestic and international enterprise customers was offset by lower service revenues of $16.6 million, primarily due to lower broadband consumer customers.
  • Adjusted EBITDA decreased 10.2% or $19.0 million year over year.
    • Hughes segment Adjusted EBITDA decreased $24.9 million year over year.  The decrease was driven primarily by lower gross margin due to a change in revenue mix.
    • ESS segment Adjusted EBITDA increased $1.3 million year over year.
    • Corporate and Other segment Adjusted EBITDA increased $4.6 million year over year.  The increase was primarily due to higher earnings of unconsolidated affiliates, net, of $2.7 million and lower legal expenses.
  • Net income decreased $24.5 million year over year.  The decrease was primarily due to an unfavorable change in investments of $53.2 million, lower operating income of $19.4 million, and losses on foreign exchange of $4.3 million.  These items were partially offset by lower net interest expense of $18.4 million, lower net income tax expense of $15.8 million, and lower losses in Other, net, of $15.4 million, which included litigation expense of $16.8 million in the second quarter of 2021.
  • Hughes broadband subscribers totaled approximately 1,346,000, declining 60,000 from March 31, 2022.  Our current capacity limitations require a balancing of capacity utilization with subscriber levels in areas of high bandwidth demand.  These constraints, and increased competitive pressures, are impacting our consumer subscriber levels.  In Latin America, subscriber levels were also impacted by adverse economic conditions, more selective customer screening, and capacity allocation to community WiFi and enterprise opportunities.
  • For the three months ended June 30, 2022, approximately 63% of Hughes segment revenue was attributable to our consumer customers with approximately 37% attributable to our enterprise customers.
  • Cash, cash equivalents and current marketable investment securities were $1.5 billion as of June 30, 2022.
  • During the three months ended June 30, 2022, we purchased 1,924,875 shares of our Class A common stock in open market trades.
  • The Jupiter 3/EchoStar XXIV satellite continues to progress at Maxar and is expected to be launched during the first half of 2023

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and six months ended June 30, 2022 and 2021 (amounts in thousands) (all US GAAP amounts reference results from operations):

 

 

For the three months ended June 30,

 

For the six months ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$   491,841

 

$   492,276

 

$   985,947

 

$   968,136

EchoStar Satellite Services

 

        4,850

 

        4,283

 

        9,324

 

        8,372

Corporate and Other

 

        2,625

 

        3,275

 

        5,579

 

        5,908

Total revenue

 

$   499,316

 

$   499,834

 

$ 1,000,850

 

$   982,416

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$   182,423

 

$   207,317

 

$   366,710

 

$   409,253

EchoStar Satellite Services

 

        3,521

 

        2,243

 

        6,212

 

        4,162

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

     (18,554)

 

     (20,497)

 

     (39,745)

 

     (41,964)

Equity in earnings (losses) of unconsolidated affiliates, net

 

           338

 

       (2,369)

 

           440

 

           984

Total Corporate & Other

 

     (18,216)

 

     (22,866)

 

     (39,305)

 

     (40,980)

Total Adjusted EBITDA

 

$   167,728

 

$   186,694

 

$   333,617

 

$   372,435

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$     10,473

 

$     35,015

 

$     99,418

 

$   112,587

Expenditures for property and equipment

 

$     75,779

 

$     83,232

 

$   187,917

 

$   262,466

 

Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):

 

 

For the three months ended June 30,

 

For the six months ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$     10,473

 

$     35,015

 

$     99,418

 

$   112,587

Interest income, net

 

       (9,072)

 

       (5,240)

 

     (15,494)

 

     (11,189)

Interest expense, net of amounts capitalized

 

      14,307

 

      28,868

 

      29,280

 

      63,535

Income tax provision (benefit), net

 

        5,390

 

      21,152

 

      38,172

 

      43,299

Depreciation and amortization

 

    116,555

 

    118,982

 

    236,991

 

    248,268

Net loss (income) attributable to non-controlling interests

 

        3,395

 

        2,280

 

        5,883

 

        3,227

EBITDA

 

    141,048

 

    201,057

 

    394,250

 

    459,727

(Gains) losses on investments, net

 

      22,538

 

     (30,633)

 

     (58,148)

 

   (109,233)

Impairment of long-lived assets

 

           711

 

             15

 

           711

 

           245

Litigation Expense

 

             —

 

      16,800

 

             —

 

      16,800

License fee dispute - India, net of non-controlling interests

 

          (211)

 

          (236)

 

          (444)

 

          (446)

Loss on Debt Repurchase

 

             —

 

           356

 

             —

 

        1,938

Foreign currency transaction (gains) losses, net

 

        3,642

 

          (665)

 

       (2,752)

 

        3,404

Adjusted EBITDA

 

$   167,728

 

$   186,694

 

$   333,617

 

$   372,435

 

 

Note on Use of Non-GAAP Financial Measures

EBITDA is defined as “Net income (loss)” excluding “Interest income, net,” “Interest expense, net of amounts capitalized,” “Income tax benefit (provision), net,” “Depreciation and amortization,” and “Net income (loss) attributable to non-controlling interests.”

Adjusted EBITDA is defined as EBITDA excluding Gains and losses on investments, net, Foreign currency transaction gains (losses), net, and other non-recurring or non-operational items.  EBITDA and Adjusted EBITDA are not measures determined in accordance with US GAAP. EBITDA and Adjusted EBITDA are reconciled to Net income (loss) in the table above and should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with US GAAP. Our management uses EBITDA and Adjusted EBITDA as measures of our operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that these non-GAAP measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they are frequently used by securities analysts, investors, and other interested parties to evaluate the performance of companies in our industry.

The consolidated financial statements of EchoStar for the periods ended June 30, 2022 and 2021 are attached to this press release. Detailed financial data and other information are available in EchoStar’s Quarterly Report on Form 10-Q for the period ended June 30, 2022 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Thursday, August 4, 2022 at 11:00 a.m. Eastern Time. The conference call will be broadcast live in listen-only mode on EchoStar’s investor relations website at ir.echostar.com.  To participate via telephone and ask a question, participants must register using this online form.
 

About EchoStar Corporation

EchoStar Corporation (NASDAQ: SATS) is a premier global provider of satellite communications solutions.  Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services business segments.
 

Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words “believe,” “anticipate,” “goal,” “seek,” “estimate,” “expect,” “intend,” “project,” “continue,” “future,” “will,” “would,” “can,” “may,” “plans,” and similar expressions and the use of future dates are intended to identify forward‑looking statements. Although management believes that the expectations reflected in these forward‑looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no responsibility for the accuracy of forward-looking statements or information or for updating forward-looking information or statements. These statements are subject to certain risks, uncertainties, and assumptions. See “Risk Factors” in EchoStar’s Annual Report on Form 10-K for the period ended December 31, 2021 as filed with the Securities and Exchange Commission and in the other documents EchoStar files with the Securities and Exchange Commission from time to time.

 

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