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

May 5, 2022

ENGLEWOOD, Colo., May 5, 2022 /PRNewswire/ -- 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

 

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SOURCE EchoStar Corporation

EchoStar Investor Relations,Terry Brown, Phone: +1 303-728-5179, Email: terry.brown@echostar.com; EchoStar Media Relations, Sharyn Nerenberg, Phone: +1 301-428-7124, Email: sharyn.nerenberg@echostar.com