EchoStar Announces Financial Results for the Three Months Ended March 31, 2022
05/05/2022 - 06:00 AM
ENGLEWOOD, Colo. May 5, 2022
Three Months Ended March 31, 2022 Financial Highlights:
Consolidated revenue of $501.5 million Net income of $88.9 million $91.4 million $1.07 and $1.06 , respectively. Consolidated Adjusted EBITDA of $165.9 million "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 $30.5 million $11.5 million Adjusted EBITDA decreased 10.7% or $19.9 million Hughes segment Adjusted EBITDA decreased $17.7 million $4.5 million ESS segment Adjusted EBITDA increased $0.8 million Corporate and Other segment Adjusted EBITDA decreased $3.0 million Net income increased $11.4 million $20.2 million $10.5 million $10.6 million $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 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
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
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,
December 31,
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
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none
—
—
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
58
58
Class B convertible common stock, $0.001 par value, 800,000,000
48
48
Class C convertible common stock, $0.001 par value, 800,000,000
—
—
Class D common stock, $0.001 par value, 800,000,000 shares
—
—
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
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
2022
2021
Cash flows from operating activities:
Net income (loss)
$ 88,945
$ 77,572
Adjustments to reconcile net income (loss) to cash flows provided
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
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
536,874
896,812
Cash and cash equivalents, including restricted amounts, end of period
$ 891,349
$ 1,584,582
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SOURCE EchoStar Corporation
