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


May 5, 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.

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Contact Information

EchoStar Investor Relations

EchoStar Media Relations

Terry Brown

Phone: +1 303-728-5179

Email: terry.brown@echostar.com

Sharyn Nerenberg

Phone: +1 301-428-7124

Email: sharyn.nerenberg@echostar.com

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 March31, 2022 and December31, 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 March31, 2022 and 58,059,622 shares issued and 38,726,923 shares outstanding at December31, 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 March31, 2022 and December31, 2021

 

48

 

48

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March31, 2022 and December31, 2021

 

 

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March31, 2022 and December31, 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 - ClassA 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