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EchoStar Announces Financial Results for the Three Months Ended March 31, 2021

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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