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EchoStar Announces Financial Results for the Three and Twelve Months Ended December 31, 2021

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Englewood, CO, February 24, 2022—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2021.

Three Months Ended December 31, 2021 Financial Highlights:

  • Consolidated revenue of $498.6 million.
  • Net loss of $80.1 million, consolidated net loss attributable to EchoStar common stock of $76.3 million, and basic and diluted loss per share of $0.88.
  • Consolidated Adjusted EBITDA of $159.5 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2021 Financial Highlights:

  • Consolidated revenue of $1,985.7 million.
  • Net income of $62.7 million, consolidated net income attributable to EchoStar common stock of $72.9 million, and basic and diluted earnings per share of $0.81.
  • Consolidated Adjusted EBITDA of $718.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“The EchoStar team delivered another solid performance in 2021 with year over year growth in revenue, net income, and adjusted EBITDA,” commented Michael Dugan, CEO and President of EchoStar. “We remain focused on meeting our customers’ needs while operating our business in an efficient manner, innovating new multi-transport technology solutions and preparing to place our next satellite, EchoStar XXIV/JUPITER 3, into service.”

Three Months Ended December 31, 2021 - Additional Information:

  • Consolidated revenue increased 1.9% or $9.4 million year over year primarily driven by higher equipment sales of $18.8 million to our domestic and international enterprise customers partially offset by lower service revenues of $9.4 million primarily due to lower broadband consumer customers.
  • Adjusted EBITDA decreased 4.3% or $7.2 million year over year.
    • Hughes segment Adjusted EBITDA decreased $10.2 million year over year. The decrease was driven primarily by lower gross margin due to a change in revenue mix as well as higher selling, general and administrative expenses.
    • ESS segment Adjusted EBITDA increased $0.7 million year over year.
    • Corporate and Other segment Adjusted EBITDA increased $2.3 million year over year. The increase was primarily due to lower corporate legal expenses partially offset by increased losses of unconsolidated affiliates, net.
  • Net income decreased $77.5 year over year. The decrease was primarily due to the impairment of our equity investment in DISH Mexico of $55.3 million, losses on investments, net, of $49.9 million, and unfavorable changes in foreign currency exchange rates of $11.2 million. These items were partially offset by lower net interest expense of $19.4 million and higher operating income of $5.5 million.
  • Hughes broadband subscribers totaled approximately 1,462,000, declining 48,000 from September 30, 2021. The decrease primarily reflects a balancing of capacity utilization with subscriber levels in areas of high bandwidth demand in both the US and Latin America.
  • For the three months ended December 31, 2021, approximately 65% of Hughes segment revenue was attributable to our consumer customers with approximately 35% attributable to our enterprise customers.
  • Cash, cash equivalents and current marketable investment securities were $1.5 billion as of December 31, 2021.
  • During the three months ended December 31, 2021, we purchased 1,203,821 shares of our Class A common stock in open market trades.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2021 and 2020 (amounts in thousands) (all US GAAP amounts reference results from operations):

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$491,154

 

 

 

$482,418

 

 

 

$1,956,226

 

 

 

$1,860,834

 

 

EchoStar Satellite Services

 

4,871 

 

 

4,165 

 

 

17,679 

 

 

17,398 

 

Corporate and Other

 

2,619 

 

 

2,690 

 

 

11,815 

 

 

9,675 

 

Total revenue

 

$498,644

 

 

 

$489,273

 

 

 

$1,985,720

 

 

 

$1,887,907

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$178,218

 

 

 

$188,389

 

 

 

$790,469

 

 

 

$723,343

 

 

EchoStar Satellite Services

 

2,704 

 

 

2,026 

 

 

9,185 

 

 

7,873 

 

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(20,675)

 

 

(23,920)

 

 

(82,615)

 

 

(87,867)

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

723 

 

 

226 

 

 

1,894

 

 

(434)

 

Total Corporate & Other

 

(21,398)

 

 

(23,694)

 

 

(80,723)

 

 

(88,301)

 

Total Adjusted EBITDA

 

$159,524

 

 

 

$166,721

 

 

 

$718,931

 

 

 

$642,915

 

 

 

 

 

 

 

 

 

 

 


Net income (Loss)
 
  $(80,083)       $(2,597)       $(62,721)       $(51,904)    

Expenditures for property and equipment

 

$86,427

 

 

 

$113,757

 

 

 

$438,430

 

 

 

$408,798

 

 

 

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

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(80,083)

 

 

 

$(2,597)

 

 

 

$(62,721)

 

 

 

$(51,904)

 

 

Interest income, net

 

(5,887)

 

 

(6,275)

 

 

(22,801)

 

 

(39,982)

 

Interest expense, net of amounts capitalized

 

15,664 

 

 

35,469 

 

 

95,512 

 

 

147,927 

 

Income tax provision (benefit), net

 

2,579 

 

 

17,760 

 

 

65,626 

 

 

24,069 

 

Depreciation and amortization

 

122,465 

 

 

132,934 

 

 

491,329 

 

 

525,011 

 

Net loss (income) attributable to non-controlling interests

 

3,735 

 

 

2,714 

 

 

10,154 

 

 

11,754 

 

EBITDA

 

58,473 

 

 

180,005 

 

 

702,541 

 

 

616,875 

 

(Gains) losses on investments, net

 

43,450

 

 

(6,458)

 

 

(69,531) 

 

 

31,306

 

Impairment of long-lived assets

 

—  

 

 

1,685 

 

 

245 

 

 

1,685 

 

Litigation expense

 

— 

 

 

 

 

16,800 

 

 

— 

 

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

 

(233) 

 

 

107

 

 

(941)

 

 

(936)

 

Foreign currency transaction (gains) losses, net

 

2,568

 

 

(8,618)

 

 

12,613

 

 

(6,015)

 

Adjusted EBITDA

 

$159,524

 

 

 

$166,721

 

 

 

$718,931

 

 

 

$642,915

 

 

 

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 December 31, 2021 are attached to this press release. Detailed financial data and other information are available in EchoStar’s Annual Report on Form 10-K for the period ended December 31, 2021 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Thursday, February 24, 2022 at 3:00 p.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 ask a question, the dial in numbers are (833) 562-0124 (toll-free) and (661) 567-1102 (international), Conference ID 4197436.

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.

 

ECHOSTAR CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share and per share amounts)

 

 

As of December 31,

 

 

2021

 

2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$535,894

 

 

 

$896,005

 

 

Marketable investment securities

 

1,010,496 

 

 

1,638,271 

 

Trade accounts receivable and contract assets, net

 

182,063 

 

 

183,989 

 

Other current assets, net

 

198,444 

 

 

189,821 

 

Total current assets

 

1,926,897 

 

 

2,908,086 

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

2,338,285 

 

 

2,390,313 

 

Operating lease right-of-use assets

 

149,198 

 

 

128,303 

 

Goodwill

 

511,086 

 

 

511,597 

 

Regulatory authorizations, net

 

469,766 

 

 

478,762 

 

Other intangible assets, net

 

13,984 

 

 

18,433 

 

Other investments, net

 

297,747 

 

 

284,937 

 

Other non-current assets, net

 

338,241 

 

 

352,921 

 

Total non-current assets

 

4,118,307 

 

 

4,165,266 

 

Total assets

 

$6,045,204

 

 

 

$7,073,352

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$109,338

 

 

 

$122,366

 

 

Current portion of long-term debt, net

 

— 

 

 

898,237 

 

Contract liabilities

 

141,343 

 

 

104,569 

 

Accrued expenses and other current liabilities

 

209,442 

 

 

299,999 

 

Total current liabilities

 

460,123 

 

 

1,425,171 

 

Non-current liabilities:

 

 

 

 

Long-term debt, net

 

1,495,994 

 

 

1,495,256 

 

Deferred tax liabilities, net

 

403,684 

 

 

359,896 

 

Operating lease liabilities

 

134,897 

 

 

114,886 

 

Other non-current liabilities

 

136,426 

 

 

70,893 

 

Total non-current liabilities

 

2,171,001 

 

 

2,040,931 

 

Total liabilities

 

2,631,124 

 

 

3,466,102 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both December 31, 2021 and 2020

 

— 

 

 

— 

 

Common stock, $0.001 par value, 4,000,000,000 shares authorized:

 

 

 

 

Class A common stock, $0.001 par value, 1,600,000,000 shares authorized,  58,059,622 shares issued and 38,726,923 shares outstanding at December 31, 2021 and 57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 2020

 

58

 

 

57 

 

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both December 31, 2020 and 2019

 

48 

 

 

48 

 

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December 31, 2021 and December 31, 2020

 

— 

 

 

— 

 

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December 31, 2021 and December 31, 2020

 

— 

 

 

— 

 

Additional paid-in capital

 

3,345,878 

 

 

3,321,426 

 

Accumulated other comprehensive income (loss)

 

(212,102)

 

 

(187,876)

 

Accumulated earnings (losses)

 

656,466 

 

 

583,591 

 

Treasury stock, at cost

 

(436,521)

 

 

(174,912)

 

Total EchoStar Corporation stockholders' equity

 

3,353,827 

 

 

3,542,334 

 

Non-controlling interests

 

60,253 

 

 

64,916 

 

Total stockholders' equity

 

3,414,080 

 

 

3,607,250 

 

Total liabilities and stockholders' equity

 

$6,045,204

 

 

 

$7,073,352

 

 

                 

 

 

 

For the years ended December 31,

 

 

2021

 

2020

 

2019

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

Services and other revenue

 

$1,715,287

 

 

 

$1,682,304

 

 

 

$1,619,271

 

 

Equipment revenue

 

270,433 

 

 

205,603 

 

 

266,810 

 

Total revenue

 

1,985,720 

 

 

1,887,907 

 

 

1,886,081 

 

Costs and expenses:

 

 

 

 

 

 

Cost of sales - services and other (exclusive of depreciation and amortization)

 

551,679 

 

 

577,943 

 

 

561,353 

 

Cost of sales - equipment (exclusive of depreciation and amortization)

 

231,975 

 

 

166,435 

 

 

226,002 

 

Selling, general and administrative expenses

 

461,705 

 

 

474,912 

 

 

509,145 

 

Research and development expenses

 

31,777 

 

 

29,448 

 

 

25,739 

 

Depreciation and amortization

 

491,329 

 

 

525,011 

 

 

490,765 

 

Impairment of long-lived assets

 

245 

 

 

1,685

 

 

—  

 

Total costs and expenses

 

1,768,710 

 

 

1,775,434 

 

 

1,813,004 

 

Operating income (loss)

 

217,010 

 

 

112,473 

 

 

73,077 

 

Other income (expense):

 

 

 

 

 

 

Interest income, net

 

22,801 

 

 

39,982 

 

 

82,352 

 

Interest expense, net of amounts capitalized

 

(95,512)

 

 

(147,927)

 

 

(251,016)

 

Gains (losses) on investments, net

 

69,531

 

 

(31,306) 

 

 

28,912

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(5,170)

 

 

(7,267)

 

 

(14,734)

 

Foreign currency transaction gains (losses), net

 

(12,613) 

 

 

6,015

 

 

(11,590)

 


Other-than-temporary impairment losses on equity method investments
 
  (55,266)              

Other, net

 

(12,434) 

 

 

195

 

 

(166) 

 

Total other income (expense), net

 

(88,663)

 

 

(140,308)

 

 

(166,242)

 

Income (loss) from continuing operations before income taxes

 

128,347

 

 

(27,835)

 

 

(93,165)

 

Income tax benefit (provision), net

 

(65,626)

 

 

(24,069)

 

 

(20,488)

 

Net income (loss) from continuing operations

 

62,721

 

 

(51,904)

 

 

(113,653)

 

Net income (loss) from discontinued operations

 

— 

 

 

— 

 

 

39,401 

 

Net income (loss)

 

62,721

 

 

(51,904)

 

 

(74,252)

 

Less: Net loss (income) attributable to non-controlling interests

 

10,154 

 

 

11,754 

 

 

11,335

 

Net income (loss) attributable to EchoStar Corporation common stock

 

$72,875

 

 

 

$(40,150)

 

 

 

$(62,917)

 

 

 

 

 

 

 

 

 

Earnings (losses) per share - Class A and B common stock:

 

 

 

 

 

 

Basic and diluted earnings (losses) from continuing operations per share

 

$0.81

 

 

 

$(0.41)

 

 

 

$(1.06)

 

 

Total basic and diluted earnings (losses) per share

 

$0.81

 

 

 

$(0.41)

 

 

 

$(0.65)

 

 

 

 

 

For the years ended December 31,

 

 

2021

 

2020

 

2019

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$62,721

 

 

 

$(51,904)

 

 

 

$(74,252)

 

 

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

491,329 

 

 

525,011 

 

 

588,200 

 

Impairment of long-lived assets

 

245 

 

 

1,685 

 

 

— 

 

Losses (gains) on investments, net

 

(69,531) 

 

 

31,306

 

 

(28,912) 

 

Equity in losses (earnings) of unconsolidated affiliates, net

 

5,170 

 

 

7,267 

 

 

14,734 

 

Foreign currency transaction losses (gains), net

 

12,613

 

 

(6,015) 

 

 

11,590 

 

Deferred tax provision (benefit), net

 

37,664 

 

 

18,147 

 

 

32,542 

 

Stock-based compensation

 

7,699 

 

 

8,887 

 

 

9,353 

 

Amortization of debt issuance costs

 

2,381 

 

 

4,324 

 

 

5,912 

 

Dividends received from unconsolidated affiliates

 

— 

 

 

— 

 

 

2,716 

 


Other-than-temporary impairment losses on equity method investments
 
  55,266          

Other, net

 

19,740

 

 

(12,501) 

 

 

6,297

 

Changes in assets and current liabilities, net:

 

 

 

 

 

 

Trade accounts receivable and contract assets, net

 

(2,334) 

 

 

2,237 

 

 

8,289

 

Other current assets, net

 

(7,303)

 

 

(12,984)

 

 

(39,190) 

 

Trade accounts payable

 

(15,599)

 

 

(12,339) 

 

 

13,149 

 

Contract liabilities

 

36,774 

 

 

3,509 

 

 

26,376 

 

Accrued expenses and other current liabilities

 

(84,821) 

 

 

42,822 

 

 

66,352 

 

Non-current assets and non-current liabilities, net

 

80,012

 

 

(15,064) 

 

 

13,166

 

Net cash flows from operating activities

 

632,226 

 

 

534,388 

 

 

656,322 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of marketable investment securities

 

(1,651,608)

 

 

(2,799,838)

 

 

(993,369)

 

Sales and maturities of marketable investment securities

 

2,321,560 

 

 

2,110,336 

 

 

2,391,220 

 

Expenditures for property and equipment

 

(438,430)

 

 

(408,798)

 

 

(418,584)

 

Expenditures for externally marketed software

 

(33,543)

 

 

(38,655)

 

 

(29,310)

 

Purchase of other investments

 

(50,000)

 

 

(5,500)

 

 

(93,687) 

 


Sales of other investments
 
  10,951          

Investments in unconsolidated affiliates

 

— 

 

 

 

 

(2,149)

 

Purchases of regulatory authorizations

 

— 

 

 

 

 

(34,447) 

 

Dividend received from unconsolidated affiliate

 

— 

 

 

— 

 

 

2,284 

 

Net cash flows from investing activities

 

158,930

 

 

(1,142,455) 

 

 

821,958

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repurchase and maturity of the 2019 Senior Secured Notes

 

— 

 

 

 

 

(920,923)

 


Repurchase and maturity of the 2021 Senior Unsecured Notes
 
  (901,618)          

Repayment of other long-term debt and finance lease obligations

 

(670)

 

 

(811)

 

 

(29,347)

 

Payment of in-orbit incentive obligations

 

(2,214)

 

 

(1,554)

 

 

(5,447)

 

Net proceeds from Class A common stock options exercised

 

408 

 

 

855 

 

 

67,337 

 

Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan

 

9,471 

 

 

10,109 

 

 

9,779 

 

Treasury share purchase

 

(261,436)

 

 

(43,458) 

 

 

 

Contribution by non-controlling interest holder

 

9,880 

 

 

18,241 

 

 

— 

 

Purchase of non-controlling interest

 

— 

 

 

 

 

(7,313) 

 

Other, net

 

(966) 

 

 

998 

 

 

603

 

Net cash flows from financing activities

 

(1,147,345)

 

 

(15,620)

 

 

(885,311)

 

Effect of exchange rates on cash and cash equivalents

 

(3,749)

 

 

(1,390)

 

 

(575)

 

Net increase (decrease) in cash and cash equivalents

 

(359,938)

 

 

(625,077) 

 

 

592,394

 

Cash and cash equivalents, including restricted amounts, beginning of period

 

896,812 

 

 

1,521,889 

 

 

929,495 

 

Cash and cash equivalents, including restricted amounts, end of period

 

$536,874

 

 

 

$896,812

 

 

 

$1,521,889