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EchoStar Announces Financial Results for the Three Months Ended March 31, 2022

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Englewood, CO, May 5, 2022—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three months ended March 31, 2022.
 

Three Months Ended March 31, 2022 Financial Highlights:

  • Consolidated revenue of $501.5 million.
  • Net income of $88.9 million, consolidated net income attributable to EchoStar common stock of $91.4 million, and basic and diluted earnings per share of common stock of $1.07 and $1.06, respectively.
  • Consolidated Adjusted EBITDA of $165.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).


“The EchoStar team turned in a solid performance in the first quarter of this year, continuing a consistent track record of fiscal responsibility,” said Hamid Akhavan, CEO and President of EchoStar.  “As we take stock of our strengths and begin to chart a new course for growth, I could not ask for a more talented, technologically astute organization to capture the great opportunities presented by the rapid changes in our industry.”

 

Three Months Ended March 31, 2022 - Additional Information:

  • Consolidated revenue increased 3.9% or $19.0 million year over year primarily driven by higher equipment sales of $30.5 million to our domestic and international enterprise customers, partially offset by lower service revenues of $11.5 million primarily due to lower broadband consumer customers.
  • Adjusted EBITDA decreased 10.7% or $19.9 million year over year.
    • Hughes segment Adjusted EBITDA decreased $17.7 million year over year.  The decrease was driven primarily by lower gross margin due to a change in revenue mix as well as a non-recurring decrease in regulatory fees of $4.5 million and bad debt recoveries that occurred in the first quarter of 2021.
    • ESS segment Adjusted EBITDA increased $0.8 million year over year.
    • Corporate and Other segment Adjusted EBITDA decreased $3.0 million year over year.  The decrease was primarily due to lower earnings of unconsolidated affiliates, net.
  • Net income increased $11.4 million year over year.   The increase was primarily due to lower net interest expense of $20.2 million and favorable gains on foreign exchange of $10.5 million.  These items were partially offset by higher income tax expense of $10.6 million, lower operating income of 8.4 million, and an unfavorable change in equity earnings in unconsolidated affiliates, net, of $3.1 million.
  • Hughes broadband subscribers totaled approximately 1,406,000, declining 56,000 from December 31, 2021.  The decrease primarily reflects a balancing of capacity utilization with subscriber levels in areas of high bandwidth demand.  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 March 31, 2022, approximately 64% of Hughes segment revenue was attributable to our consumer customers with approximately 36% attributable to our enterprise customers.
  • Cash, cash equivalents and current marketable investment securities were $1.5 billion as of March 31, 2022.
  • During the three months ended March 31, 2022, we purchased 1,462,094 shares of our Class A common stock in open market trades.
  • The Jupiter 3 / EchoStar XXIV satellite is expected to be launched in the first quarter of 2023.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three months ended March 31, 2022 and 2021 (amounts in thousands) (all US GAAP amounts reference results from operations):

 

 

For the three months ended March 31,

 

 

2022

 

2021

Revenue

 

 

 

 

Hughes

 

$        494,106

 

$        475,859

EchoStar Satellite Services

 

              4,474

 

              4,089

Corporate and Other

 

              2,954

 

              2,634

Total revenue

 

$        501,534

 

$        482,582

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

Hughes

 

$        184,287

 

$        201,937

EchoStar Satellite Services

 

               2,691

 

               1,919

Corporate & Other:

 

 

 

 

Corporate overhead, operating and other

 

           (21,191)

 

           (21,468)

Equity in earnings (losses) of unconsolidated affiliates, net

 

                 102

 

               3,353

Total Corporate & Other

 

           (21,089)

 

           (18,115)

Total Adjusted EBITDA

 

$         165,889

 

$         185,741

 

 

 

 

 

Net income (loss)

 

$           88,945

 

$           77,572

Expenditures for property and equipment

 

$         112,138

 

$         179,235

 

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

 

 

For the three months ended March 31,

 

 

2022

 

2021

 

 

 

 

 

Net income (loss)

 

$          88,945

 

$          77,572

Interest income, net

 

            (6,422)

 

            (5,949)

Interest expense, net of amounts capitalized

 

            14,973

 

            34,667

Income tax provision (benefit), net

 

            32,782

 

            22,147

Depreciation and amortization

 

          120,436

 

          129,286

Net loss (income) attributable to non-controlling interests

 

              2,488

 

                 947

EBITDA

 

          253,202

 

          258,670

(Gains) losses on investments, net

 

           (80,686)

 

           (78,600)

Impairment of long-lived assets

 

                    —

 

                 230

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

 

                (233)

 

                (210)

Loss on Debt Repurchase

 

                    —

 

               1,582

Foreign currency transaction (gains) losses, net

 

             (6,394)

 

               4,069

Adjusted EBITDA

 

$         165,889

 

$         185,741


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, 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 March 31, 2022 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Thursday, May 5, 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 ask a question, the dial in numbers are (833) 562-0124 (toll-free) and (661) 567-1102 (international), Conference ID 6271168.

 

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
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)

 

 

As of

 

 

March 31, 2022

 

December 31, 2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$       889,199

 

$       535,894

Marketable investment securities

 

         634,593

 

      1,010,496

Trade accounts receivable and contract assets, net

 

         199,306

 

         182,063

Other current assets, net

 

         209,905

 

         198,444

Total current assets

 

      1,933,003

 

      1,926,897

Non-current assets:

 

 

 

 

Property and equipment, net

 

      2,376,143

 

      2,338,285

Operating lease right-of-use assets

 

         150,980

 

         149,198

Goodwill

 

         535,394

 

         511,086

Regulatory authorizations, net

 

          470,329

 

          469,766

Other intangible assets, net

 

            17,792

 

            13,984

Other investments, net

 

          350,318

 

          297,747

Other non-current assets, net

 

          335,794

 

          338,241

Total non-current assets

 

       4,236,750

 

       4,118,307

Total assets

 

$     6,169,753

 

$     6,045,204

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$        109,390

 

$        109,338

Contract liabilities

 

          138,201

 

          141,343

Accrued expenses and other current liabilities

 

          176,083

 

          209,442

Total current liabilities

 

          423,674

 

          460,123

Non-current liabilities:

 

 

 

 

Long-term debt, net

 

       1,496,185

 

       1,495,994

Deferred tax liabilities, net

 

          430,808

 

          403,684

Operating lease liabilities

 

          136,723

 

          134,897

Other non-current liabilities

 

          124,450

 

          136,426

Total non-current liabilities

 

       2,188,166

 

       2,171,001

Total liabilities

 

       2,611,840

 

       2,631,124

 

 

 

 

 

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, 2022 and December 31, 2021

 

                    —

 

                    —

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,  58,441,449 shares issued and 37,646,656 shares outstanding at March 31, 2022 and 58,059,622 shares issued and 38,726,923 shares outstanding at December 31, 2021

 

                   58

 

                   58

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, 2022 and December 31, 2021

 

                   48

 

                   48

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March 31, 2022 and December 31, 2021

 

                    —

 

                    —

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March 31, 2022 and December 31, 2021

 

                    —

 

                    —

Additional paid-in capital

 

         3,343,056

 

         3,345,878

Accumulated other comprehensive income (loss)

 

          (173,280)

 

          (212,102)

Accumulated earnings (losses)

 

            747,899

 

            656,466

Treasury shares, at cost

 

          (471,582)

 

          (436,521)

Total EchoStar Corporation stockholders' equity

 

         3,446,199

 

         3,353,827

Non-controlling interests

 

            111,714

 

              60,253

Total stockholders' equity

 

         3,557,913

 

         3,414,080

Total liabilities and stockholders' equity

 

$       6,169,753

 

$       6,045,204


 

ECHOSTAR CORPORATION
Consolidated Statements of Operations
(Amounts in thousands, except per share amounts)

 

 

For the three months ended March 31,

 

 

2022

 

2021

Revenue:

 

 

 

 

Services and other revenue

 

$          418,811

 

$          430,337

Equipment revenue

 

             82,723

 

              52,245

Total revenue

 

           501,534

 

            482,582

Costs and expenses:

 

 

 

 

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

 

           141,129

 

            132,789

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

 

              69,114

 

              45,151

Selling, general and administrative expenses

 

            118,170

 

            114,119

Research and development expenses

 

               7,617

 

                7,545

Depreciation and amortization

 

           120,436

 

            129,286

Impairment of long-lived assets

 

                    —

 

                  230

Total costs and expenses

 

           456,466

 

            429,120

Operating income (loss)

 

             45,068

 

              53,462

Other income (expense):

 

 

 

 

Interest income, net

 

               6,422

 

                5,949

Interest expense, net of amounts capitalized

 

            (14,973)

 

            (34,667)

Gains (losses) on investments, net

 

              80,686

 

              78,600

Equity in earnings (losses) of unconsolidated affiliates, net

 

              (1,714)

 

                1,374

Foreign currency transaction gains (losses), net

 

                6,394

 

              (4,069)

Other, net

 

                 (156)

 

                 (930)

Total other income (expense), net

 

              76,659

 

              46,257

Income (loss) before income taxes

 

            121,727

 

              99,719

Income tax benefit (provision), net

 

            (32,782)

 

            (22,147)

Net income (loss)

 

              88,945

 

              77,572

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

 

                2,488

 

                  947

Net income (loss) attributable to EchoStar Corporation common stock

 

$            91,433

 

$            78,519

 

 

 

 

 

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

 

 

 

 

Basic

 

$                1.07

 

$                0.84

Diluted

 

$                1.06

 

$                0.84


 

ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(Amounts in thousands)

 

 

For the three months ended March 31,

 

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$           88,945

 

$           77,572

Adjustments to reconcile net income (loss) to cash flows provided by (used for) operating activities:

 

 

 

 

Depreciation and amortization

 

           120,436

 

           129,286

Impairment of long-lived assets

 

                    —

 

                  230

Losses (gains) on investments, net

 

            (80,686)

 

            (78,600)

Equity in losses (earnings) of unconsolidated affiliates, net

 

                1,714

 

              (1,374)

Foreign currency transaction losses (gains), net

 

              (6,394)

 

                4,069

Deferred tax provision (benefit), net

 

              25,538

 

              18,370

Stock-based compensation

 

                1,860

 

                2,011

Amortization of debt issuance costs

 

                  191

 

                1,118

Other, net

 

              (2,528)

 

              11,551

Changes in assets and liabilities, net:

 

 

 

 

Trade accounts receivable and contract assets, net

 

              (8,480)

 

              (6,090)

Other current assets, net

 

              (3,340)

 

              (1,736)

Trade accounts payable

 

                7,046

 

            (18,375)

Contract liabilities

 

              (3,142)

 

                7,938

Accrued expenses and other current liabilities

 

            (27,033)

 

            (27,447)

Non-current assets and non-current liabilities, net

 

              (9,774)

 

              (1,636)

Net cash provided by (used for) operating activities

 

            104,353

 

            116,887

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investment securities

 

            (88,578)

 

          (389,071)

Sales and maturities of marketable investment securities

 

            492,812

 

         1,361,632

Expenditures for property and equipment

 

          (112,138)

 

          (179,235)

Expenditures for externally marketed software

 

              (5,093)

 

              (7,846)

India JV formation

 

              (7,892)

 

                    —

Purchase of other investments

 

                    —

 

            (50,000)

Sales of other investments

 

                    —

 

                1,500

Net cash provided by (used for) investing activities

 

            279,111

 

            736,980

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Repurchase and maturity of the 2021 Senior Unsecured Notes

 

                    —

 

            (62,588)

Payment of finance lease obligations

 

                   (85)

 

                 (329)

Payment of in-orbit incentive obligations

 

              (1,444)

 

              (1,104)

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

 

                2,367

 

                2,486

Treasury share repurchase

 

            (33,307)

 

          (107,862)

Contribution by non-controlling interest holder

 

                    —

 

                5,400

Other, net

 

                    —

 

                 (292)

Net cash provided by (used for) financing activities

 

            (32,469)

 

          (164,289)

 

 

 

 

 

Effect of exchange rates on cash and cash equivalents

 

                3,480

 

              (1,808)

Net increase (decrease) in cash and cash equivalents

 

            354,475

 

            687,770

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

 

            536,874

 

            896,812

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

 

$          891,349

 

$       1,584,582