EchoStar Announces Financial Results for the Three Months Ended March 31, 2021
Englewood, CO, May 6, 2021—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three months ended March 31, 2021.
Three Months Ended March 31, 2021 Financial Highlights:
- Consolidated revenues of $482.6 million.
- Net income of $77.6 million, consolidated net income attributable to EchoStar common stock of $78.5 million, and basic and diluted earnings per share of $0.84.
- Consolidated Adjusted EBITDA of $185.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
“I am pleased with the company’s financial performance in the first quarter of 2021,” commented Michael Dugan, CEO and President of EchoStar. “We grew revenue, net income, and Adjusted EBITDA over the same period last year by focusing on meeting our customers’ needs for connectivity and prudently managing all areas of the business.”
Three Months Ended March 31, 2021 - Additional Information:
- Consolidated revenue increased 3.6% or $16.9 million year over year primarily driven by higher sales of broadband services to our consumer customers. This increase included an estimated negative foreign exchange impact of $5.9 million.
- Adjusted EBITDA increased 25% or $37.1 million year over year.
- Hughes segment Adjusted EBITDA increased $39.7 million year over year. The increase was driven primarily by the higher gross margin associated with the growth in our consumer broadband service revenue and lower selling, general and administrative expenses.
- ESS segment Adjusted EBITDA was essentially flat year over year.
- Corporate and Other segment Adjusted EBITDA decreased by $2.5 million year over year. The decrease was primarily due to lower equity in earnings of unconsolidated affiliates, net, and higher legal expense.
- Net income increased $135.3 million to $77.6 million. The increase was primarily due to higher operating income of $42.9 million and higher gains on investments, net, of $125.3 million, partially offset by higher income tax expense, net, of $29.6 million.
- Total Hughes broadband subscribers are approximately 1,553,000 as of March 31, 2021. Subscribers in the US decreased by 25,000 to approximately 1,164,000. In Latin America, subscribers increased by 14,000 to approximately 389,000.
- For the three months ended March 31, 2021, approximately 70% of Hughes segment revenue was attributable to our consumer customers with approximately 30% attributable to our enterprise customers.
- Cash, cash equivalents and current marketable investment securities were $2.3 billion as of March 31, 2021.
- For the three months ended March 31, 2021, we purchased 4,770,714 shares of our Class A common stock in open market trades.
- For the three months ended March 31, 2021, we purchased $90.5 million of our 7.625% Sr. Unsecured Notes due June 2021 in open market trades.
Set forth below is a table highlighting certain of EchoStar’s segment results for the three months ended March 31, 2021 and 2020 (amounts in thousands) (all US GAAP amounts reference results from operations):
|
|
|
For the three months ended March 31, |
||||||
|
|
|
2021 |
|
2020 |
||||
|
|
|
|
|
|
||||
|
Revenue |
|
|
|
|
||||
|
Hughes |
|
$475,859 |
|
|
|
$458,482 |
|
|
|
EchoStar Satellite Services |
|
4,089 |
|
|
4,652 |
|
||
|
Corporate and Other |
|
2,634 |
|
|
2,532 |
|
||
|
Total revenue |
|
$482,582 |
|
|
|
$465,666 |
|
|
|
|
|
|
|
|
||||
|
Adjusted EBITDA |
|
|
|
|
||||
|
Hughes |
|
$201,937 |
|
|
|
$162,219 |
|
|
|
EchoStar Satellite Services |
|
1,919 |
|
|
2,030 |
|
||
|
Corporate & Other: |
|
|
|
|
||||
|
Corporate overhead, operating and other |
|
(21,468) |
|
|
(20,124) |
|
||
|
Equity in earnings (losses) of unconsolidated affiliates, net |
|
3,353 |
|
|
4,512 |
|
||
|
Total Corporate & Other |
|
(18,115) |
|
|
(15,612) |
|
||
|
Total Adjusted EBITDA |
|
$185,741 |
|
|
|
$148,637 |
|
|
|
|
|
|
|
|
||||
|
Net income (loss) |
|
$77,572 |
|
|
|
$(57,737) |
|
|
|
Expenditures for property and equipment |
|
$179,235 |
|
|
|
$104,604 |
|
|
Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):
|
|
|
For the three months ended March 31, |
||||||
|
|
|
2021 |
|
2020 |
||||
|
|
|
|
|
|
||||
|
Net income (loss) |
|
$77,572 |
|
|
|
$(57,737) |
|
|
|
Interest income, net |
|
(5,949) |
|
|
(15,583) |
|
||
|
Interest expense, net of amounts capitalized |
|
34,667 |
|
|
36,233 |
|
||
|
Income tax provision (benefit), net |
|
22,147 |
|
|
(7,492) |
|
||
|
Depreciation and amortization |
|
129,286 |
|
|
132,368 |
|
||
|
Net loss (income) attributable to non-controlling interests |
|
947 |
|
|
3,442 |
|
||
|
EBITDA |
|
258,670 |
|
|
91,231 |
|
||
|
(Gains) losses on investments, net |
|
(78,600) |
|
|
46,672 |
|
||
|
Impairment of long-lived assets |
|
230 |
|
|
— |
|
||
|
License fee dispute - India, net of non-controlling interests |
|
(210) |
|
|
(110) |
|
||
|
Loss on Debt Repurchase |
|
1,582 |
|
|
— |
|
||
|
Foreign currency transaction (gains) losses, net |
|
4,069 |
|
|
10,844 |
|
||
|
Adjusted EBITDA |
|
$185,741 |
|
|
|
$148,637 |
|
|
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 March 31, 2021 and 2020 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 March 31, 2021 filed today with the Securities and Exchange Commission.
EchoStar will host a conference call to discuss its earnings on Thursday, May 6, 2021 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 ask a question, the dial in numbers are (833) 562-0124 (toll-free) and (661) 567-1102 (international), Conference ID 1976218.
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, 2020 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
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
|
|
|
As of |
||||||
|
|
|
March 31, 2021 |
|
December 31, 2020 |
||||
|
Assets |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
|
$1,583,747 |
|
|
|
$896,005 |
|
|
|
Marketable investment securities |
|
735,418 |
|
|
1,638,271 |
|
||
|
Trade accounts receivable and contract assets, net |
|
187,280 |
|
|
183,989 |
|
||
|
Other current assets, net |
|
190,958 |
|
|
189,821 |
|
||
|
Total current assets |
|
2,697,403 |
|
|
2,908,086 |
|
||
|
Non-current assets: |
|
|
|
|
||||
|
Property and equipment, net |
|
2,420,917 |
|
|
2,390,313 |
|
||
|
Operating lease right-of-use assets |
|
131,601 |
|
|
128,303 |
|
||
|
Goodwill |
|
510,945 |
|
|
511,597 |
|
||
|
Regulatory authorizations, net |
|
476,092 |
|
|
478,762 |
|
||
|
Other intangible assets, net |
|
16,316 |
|
|
18,433 |
|
||
|
Other investments, net |
|
347,615 |
|
|
284,937 |
|
||
|
Other non-current assets, net |
|
350,920 |
|
|
352,921 |
|
||
|
Total non-current assets |
|
4,254,406 |
|
|
4,165,266 |
|
||
|
Total assets |
|
$6,951,809 |
|
|
|
$7,073,352 |
|
|
|
|
|
|
|
|
||||
|
Liabilities and Stockholders' Equity |
|
|
|
|
||||
|
Current liabilities: |
|
|
|
|
||||
|
Trade accounts payable |
|
$106,500 |
|
|
|
$122,366 |
|
|
|
Current portion of long-term debt, net |
|
808,758 |
|
|
898,237 |
|
||
|
Contract liabilities |
|
112,507 |
|
|
104,569 |
|
||
|
Accrued expenses and other current liabilities |
|
304,018 |
|
|
299,999 |
|
||
|
Total current liabilities |
|
1,331,783 |
|
|
1,425,171 |
|
||
|
Non-current liabilities: |
|
|
|
|
||||
|
Long-term debt, net |
|
1,495,436 |
|
|
1,495,256 |
|
||
|
Deferred tax liabilities, net |
|
378,271 |
|
|
359,896 |
|
||
|
Operating lease liabilities |
|
118,569 |
|
|
114,886 |
|
||
|
Other non-current liabilities |
|
69,885 |
|
|
70,893 |
|
||
|
Total non-current liabilities |
|
2,062,161 |
|
|
2,040,931 |
|
||
|
Total liabilities |
|
3,393,944 |
|
|
3,466,102 |
|
||
|
|
|
|
|
|
||||
|
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
ECHOSTAR CORPORATION
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
|
Stockholders' equity: |
|
|
|
|
||||
|
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both March 31, 2021 and December 31, 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, 57,712,888 shares issued and 44,551,347 shares outstanding at March 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 March 31, 2021 and December 31, 2020 |
|
48 |
|
|
48 |
|
||
|
Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March 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 March 31, 2021 and December 31, 2020 |
|
— |
|
|
— |
|
||
|
Additional paid-in capital |
|
3,333,047 |
|
|
3,321,426 |
|
||
|
Accumulated other comprehensive income (loss) |
|
(215,476) |
|
|
(187,876) |
|
||
|
Accumulated earnings (losses) |
|
662,110 |
|
|
583,591 |
|
||
|
Treasury shares, at cost |
|
(285,681) |
|
|
(174,912) |
|
||
|
Total EchoStar Corporation stockholders' equity |
|
3,494,106 |
|
|
3,542,334 |
|
||
|
Non-controlling interests |
|
63,759 |
|
|
64,916 |
|
||
|
Total stockholders' equity |
|
3,557,865 |
|
|
3,607,250 |
|
||
|
Total liabilities and stockholders' equity |
|
$6,951,809 |
|
|
|
$7,073,352 |
|
|
ECHOSTAR CORPORATION
Consolidated Statements of Operations
(Amounts in thousands, except per share amounts)
|
|
|
For the three months ended March 31, |
||||||
|
|
|
2021 |
|
2020 |
||||
|
|
|
|
|
|
||||
|
Revenue: |
|
|
|
|
||||
|
Services and other revenue |
|
$430,337 |
|
|
|
$408,357 |
|
|
|
Equipment revenue |
|
52,245 |
|
|
57,309 |
|
||
|
Total revenue |
|
482,582 |
|
|
465,666 |
|
||
|
Costs and expenses: |
|
|
|
|
||||
|
Cost of sales - services and other (exclusive of depreciation and amortization) |
|
132,789 |
|
|
145,252 |
|
||
|
Cost of sales - equipment (exclusive of depreciation and amortization) |
|
45,151 |
|
|
45,908 |
|
||
|
Selling, general and administrative expenses |
|
114,119 |
|
|
125,281 |
|
||
|
Research and development expenses |
|
7,545 |
|
|
6,254 |
|
||
|
Depreciation and amortization |
|
129,286 |
|
|
132,368 |
|
||
|
Impairment of long-lived assets |
|
230 |
|
|
— |
|
||
|
Total costs and expenses |
|
429,120 |
|
|
455,063 |
|
||
|
Operating income (loss) |
|
53,462 |
|
|
10,603 |
|
||
|
Other income (expense): |
|
|
|
|
||||
|
Interest income, net |
|
5,949 |
|
|
15,583 |
|
||
|
Interest expense, net of amounts capitalized |
|
(34,667) |
|
|
(36,233) |
|
||
|
Gains (losses) on investments, net |
|
78,600 |
|
|
(46,672) |
|
||
|
Equity in earnings (losses) of unconsolidated affiliates, net |
|
1,374 |
|
|
2,613 |
|
||
|
Foreign currency transaction gains (losses), net |
|
(4,069) |
|
|
(10,844) |
|
||
|
Other, net |
|
(930) |
|
|
(279) |
|
||
|
Total other income (expense), net |
|
46,257 |
|
|
(75,832) |
|
||
|
Income (loss) before income taxes |
|
99,719 |
|
|
(65,229) |
|
||
|
Income tax benefit (provision), net |
|
(22,147) |
|
|
7,492 |
|
||
|
Net income (loss) |
|
77,572 |
|
|
(57,737) |
|
||
|
Less: Net loss (income) attributable to non-controlling interests |
|
947 |
|
|
3,442 |
|
||
|
Net income (loss) attributable to EchoStar Corporation common stock |
|
$78,519 |
|
|
|
$(54,295) |
|
|
|
|
|
|
|
|
||||
|
Earnings (losses) per share - Class A and B common stock: |
|
|
|
|
||||
|
Basic and diluted earnings (losses) per share |
|
$0.84 |
|
|
|
$(0.56) |
|
|
ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(Amounts in thousands)
|
|
|
For the three months ended March 31, |
||||||
|
|
|
2021 |
|
2020 |
||||
|
|
|
|
|
|
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net income (loss) |
|
$77,572 |
|
|
|
$(57,737) |
|
|
|
Adjustments to reconcile net income (loss) to cash flows provided by (used for) operating activities: |
|
|
|
|
||||
|
Depreciation and amortization |
|
129,286 |
|
|
132,368 |
|
||
|
Impairment of long-lived assets |
|
230 |
|
|
— |
|
||
|
Losses (gains) on investments, net |
|
(78,600) |
|
|
46,672 |
|
||
|
Equity in losses (earnings) of unconsolidated affiliates, net |
|
(1,374) |
|
|
(2,613) |
|
||
|
Foreign currency transaction losses (gains), net |
|
4,069 |
|
|
10,844 |
|
||
|
Deferred tax provision (benefit), net |
|
18,370 |
|
|
(10,064) |
|
||
|
Stock-based compensation |
|
2,011 |
|
|
2,384 |
|
||
|
Amortization of debt issuance costs |
|
1,118 |
|
|
1,050 |
|
||
|
Other, net |
|
11,551 |
|
|
(4,899) |
|
||
|
Changes in assets and liabilities, net: |
|
|
|
|
||||
|
Trade accounts receivable and contract assets, net |
|
(6,090) |
|
|
(7,664) |
|
||
|
Other current assets, net |
|
(1,736) |
|
|
(16,127) |
|
||
|
Trade accounts payable |
|
(18,375) |
|
|
(9,559) |
|
||
|
Contract liabilities |
|
7,938 |
|
|
(3,212) |
|
||
|
Accrued expenses and other current liabilities |
|
(27,447) |
|
|
(4,922) |
|
||
|
Non-current assets and non-current liabilities, net |
|
(1,636) |
|
|
(5,226) |
|
||
|
Net cash provided by (used for) operating activities |
|
116,887 |
|
|
71,295 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Purchases of marketable investment securities |
|
(389,071) |
|
|
(550,891) |
|
||
|
Sales and maturities of marketable investment securities |
|
1,361,632 |
|
|
687,579 |
|
||
|
Expenditures for property and equipment |
|
(179,235) |
|
|
(104,604) |
|
||
|
Expenditures for externally marketed software |
|
(7,846) |
|
|
(8,638) |
|
||
|
Purchase of other investments |
|
(50,000) |
|
|
(5,500) |
|
||
|
Sales of other investments |
|
1,500 |
|
|
— |
|
||
|
Net cash provided by (used for) investing activities |
|
736,980 |
|
|
17,946 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Repurchase of the 2021 Senior Unsecured Notes |
|
(62,588) |
|
|
— |
|
||
|
Payment of finance lease obligations |
|
(329) |
|
|
(215) |
|
||
|
Payment of in-orbit incentive obligations |
|
(1,104) |
|
|
(801) |
|
||
|
Net proceeds from Class A common stock options exercised |
|
— |
|
|
150 |
|
||
|
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan |
|
2,486 |
|
|
2,924 |
|
||
|
Treasury share repurchase |
|
(107,862) |
|
|
(5,893) |
|
||
|
Contribution by non-controlling interest holder |
|
5,400 |
|
|
4,000 |
|
||
|
Other, net |
|
(292) |
|
|
817 |
|
||
|
Net cash provided by (used for) financing activities |
|
(164,289) |
|
|
982 |
|
||
|
|
|
|
|
|
||||
|
Effect of exchange rates on cash and cash equivalents |
|
(1,808) |
|
|
(4,809) |
|
||
|
Net increase (decrease) in cash and cash equivalents |
|
687,770 |
|
|
85,414 |
|
||
|
Cash and cash equivalents, including restricted amounts, beginning of period |
|
896,812 |
|
|
1,521,889 |
|
||
|
Cash and cash equivalents, including restricted amounts, end of period |
|
$1,584,582 |
|
|
|
$1,607,303 |
|
|