EchoStar Announces Financial Results for the Three and Nine Months Ended September 30, 2021

November 9, 2021

ENGLEWOOD, Colo., Nov. 9, 2021 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2021.

Three Months Ended September 30, 2021 Financial Highlights:

  • Consolidated revenue of $504.7 million.
     
  • Net income of $30.2 million, consolidated net income attributable to EchoStar common stock of $33.4 million, and basic and diluted earnings per share of $0.38.
     
  • Consolidated Adjusted EBITDA of $187.0 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Nine Months Ended September 30, 2021 Financial Highlights:

  • Consolidated revenue of $1,487.1 million.
     
  • Net income of $142.8 million, consolidated net income attributable to EchoStar common stock of $149.2 million, and basic and diluted earnings per share of $1.64.
     
  • Consolidated Adjusted EBITDA of $559.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"I am pleased with our financial performance in the third quarter of 2021," commented Michael Dugan, CEO and President of EchoStar.  "We grew revenue, net income, and Adjusted EBITDA from the same period last year by managing all areas of the business prudently.  Laying a strategic foundation for the multi-orbit future, we announced agreements with OneWeb to provide satellite connectivity solutions in the US and India and fulfilled the remaining ITU requirements to bring our Sirion-1 filing into use which is a key milestone in the development of our global S-band capabilities." 

Three Months Ended September 30, 2021 - Additional Information:

  • Consolidated revenue increased 6.6% or $31.2 million year over year primarily driven by higher equipment sales of $25.0 million to our domestic and international enterprise customers.
     
  • Adjusted EBITDA increased 12.2% or $20.3 million year over year.
    • Hughes segment Adjusted EBITDA increased $16.5 million year over year.  The increase was driven primarily by higher revenue and lower cost of services provided to our consumer customers.
    • ESS segment Adjusted EBITDA was flat year over year.
    • Corporate and Other segment Adjusted EBITDA increased $3.7 million year over year.
       
  • Net income increased $6.9 million year over year.  The increase was primarily due to higher operating income of $25.6 million and lower net interest expense of $20.0 million, partially offset by higher income tax expense, net, of $16.8 million, unfavorable changes in foreign currency exchange rates of $13.3 million, and lower gains on investments, net, of $11.3 million.
     
  • Total Hughes broadband subscribers were approximately 1,510,000, declining 32,000 from June 30, 2021.  Subscribers in the US decreased by 24,000 as compared to June 30, 2021 to approximately 1,120,000.  In the same period, subscribers in Latin America decreased by 8,000 to approximately 390,000.  Similar to the US, our Latin American subscriber base has become capacity constrained in certain areas.  While the balancing of total subscribers relative to capacity utilization resulted in lower subscribers, average revenue per user increased in both regions from the second quarter of 2021.
     
  • For the three months ended September 30, 2021, approximately 66% of Hughes segment revenue was attributable to our consumer customers with approximately 34% attributable to our enterprise customers.
     
  • Cash, cash equivalents and current marketable investment securities were $1.6 billion as of September 30, 2021.
     
  • During the three months ended September 30, 2021, we repurchased 2,592,885 shares of our Class A common stock in open market trades.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and nine months ended September 30, 2021 and 2020 (amounts in thousands) (all US GAAP amounts reference results from operations):



For the three months
ended September 30,


For the nine months
ended September 30,



2021


2020


2021


2020










Revenue









Hughes


$

496,937



$

466,762



$

1,465,073



$

1,378,416


EchoStar Satellite Services


4,436



4,402



12,808



13,233


Corporate and Other


3,287



2,338



9,195



6,985


Total revenue


$

504,660



$

473,502



$

1,487,076



$

1,398,634











Adjusted EBITDA









Hughes


$

202,997



$

186,458



$

612,251



$

534,955


EchoStar Satellite Services


2,319



2,274



6,481



5,847


Corporate & Other:









Corporate overhead, operating and other


(19,974)



(21,572)



(61,940)



(63,948)


Equity in earnings (losses) of unconsolidated affiliates, net


1,630



(504)



2,615



(660)


Total Corporate & Other


(18,344)



(22,076)



(59,325)



(64,608)


Total Adjusted EBITDA


$

186,972



$

166,656



$

559,407



$

476,194











Net income (loss)


$

30,217



$

23,273



$

142,804



$

(49,307)


Expenditures for property and equipment


$

89,537



$

98,137



$

352,003



$

295,041


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



For the three months
ended September 30,


For the nine months
ended September 30,



2021


2020


2021


2020










Net income (loss)


$

30,217



$

23,273



$

142,804



$

(49,307)


Interest income, net


(5,725)



(7,364)



(16,914)



(33,707)


Interest expense, net of amounts capitalized


16,313



37,967



79,848



112,458


Income tax provision (benefit), net


19,748



2,950



63,047



6,309


Depreciation and amortization


120,596



129,822



368,864



392,077


Net loss (income) attributable to non-controlling interests


3,192



2,167



6,419



9,040


EBITDA


184,341



188,815



644,068



436,870


(Gains) losses on investments, net


(3,748)



(14,998)



(112,981)



37,764


Impairment of long-lived assets






245




Litigation Expense






16,800




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


(262)



(480)



(708)



(1,043)


Loss on Debt Repurchase






1,938




Foreign currency transaction (gains) losses, net


6,641



(6,681)



10,045



2,603


Adjusted EBITDA


$

186,972



$

166,656



$

559,407



$

476,194


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 September 30, 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 September 30, 2021 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Tuesday, November 9, 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 1061358.

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



September 30,
2021


December 31,
2020

Assets





Current assets:





Cash and cash equivalents


$

429,656



$

896,005


Marketable investment securities


1,127,048



1,638,271


Trade accounts receivable and contract assets, net


201,751



183,989


Other current assets, net


195,993



189,821


Total current assets


1,954,448



2,908,086


Non-current assets:





Property and equipment, net


2,374,080



2,390,313


Operating lease right-of-use assets


140,739



128,303


Goodwill


511,266



511,597


Regulatory authorizations, net


471,010



478,762


Other intangible assets, net


14,378



18,433


Other investments, net


351,884



284,937


Other non-current assets, net


364,553



352,921


Total non-current assets


4,227,910



4,165,266


Total assets


$

6,182,358



$

7,073,352







Liabilities and Stockholders' Equity





Current liabilities:





Trade accounts payable


$

111,047



$

122,366


Current portion of long-term debt, net




898,237


Contract liabilities


134,635



104,569


Accrued expenses and other current liabilities


241,615



299,999


Total current liabilities


487,297



1,425,171


Non-current liabilities:





Long-term debt, net


1,495,805



1,495,256


Deferred tax liabilities, net


407,650



359,896


Operating lease liabilities


127,424



114,886


Other non-current liabilities


135,737



70,893


Total non-current liabilities


2,166,616



2,040,931


Total liabilities


2,653,913



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 September 30, 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,  57,939,820 shares issued and 39,810,942 shares outstanding at September 30, 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 September 30, 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 September 30, 2021 and December 31, 2020





Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2021 and December 31, 2020





Additional paid-in capital


3,341,751



3,321,426


Accumulated other comprehensive income (loss)


(205,470)



(187,876)


Accumulated earnings (losses)


732,814



583,591


Treasury shares, at cost


(406,295)



(174,912)


Total EchoStar Corporation stockholders' equity


3,462,906



3,542,334


Non-controlling interests


65,539



64,916


Total stockholders' equity


3,528,445



3,607,250


Total liabilities and stockholders' equity


$

6,182,358



$

7,073,352












 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)




For the three months
ended September 30,


For the nine months
ended September 30,



2021


2020


2021


2020










Revenue:









Services and other revenue


$

432,739



$

426,532



$

1,294,355



$

1,251,932


Equipment revenue


71,921



46,970



192,721



146,702


Total revenue


504,660



473,502



1,487,076



1,398,634


Costs and expenses:









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


138,179



146,577



410,515



432,848


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


62,328



37,079



161,982



115,529


Selling, general and administrative expenses


112,986



115,358



341,143



354,437


Research and development expenses


7,974



7,676



22,960



21,378


Depreciation and amortization


120,596



129,822



368,864



392,077


Impairment of long-lived assets






245




Total costs and expenses


442,063



436,512



1,305,709



1,316,269


Operating income (loss)


62,597



36,990



181,367



82,365


Other income (expense):









Interest income, net


5,725



7,364



16,914



33,707


Interest expense, net of amounts capitalized


(16,313)



(37,967)



(79,848)



(112,458)


Gains (losses) on investments, net


3,748



14,998



112,981



(37,764)


Equity in earnings (losses) of unconsolidated affiliates, net


74



(2,134)



(2,596)



(5,866)


Foreign currency transaction gains (losses), net


(6,641)



6,681



(10,045)



(2,603)


Other, net


775



291



(12,922)



(379)


Total other income (expense), net


(12,632)



(10,767)



24,484



(125,363)


Income (loss) before income taxes


49,965



26,223



205,851



(42,998)


Income tax benefit (provision), net


(19,748)



(2,950)



(63,047)



(6,309)


Net income (loss)


30,217



23,273



142,804



(49,307)


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


3,192



2,167



6,419



9,040


Net income (loss) attributable to EchoStar Corporation common stock


$

33,409



$

25,440



$

149,223



$

(40,267)











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









Basic and diluted earnings (losses) per share


$

0.38



$

0.26



$

1.64



$

(0.41)



 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(Amounts in thousands)




For the nine months ended
September 30,



2021


2020






Cash flows from operating activities:





Net income (loss)


$

142,804



$

(49,307)


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





Depreciation and amortization


368,864



392,077


Impairment of long-lived assets


245




Losses (gains) on investments, net


(112,981)



37,764


Equity in losses (earnings) of unconsolidated affiliates, net


2,596



5,866


Foreign currency transaction losses (gains), net


10,045



2,603


Deferred tax provision (benefit), net


45,950



4,474


Stock-based compensation


5,913



6,887


Amortization of debt issuance costs


2,192



3,212


Other, net


16,691



(9,145)


Changes in assets and liabilities, net:





Trade accounts receivable and contract assets, net


(20,894)



(9,157)


Other current assets, net


(7,841)



(21,090)


Trade accounts payable


(15,386)



(17,824)


Contract liabilities


30,066



(11,438)


Accrued expenses and other current liabilities


(103,457)



29,155


Non-current assets and non-current liabilities, net


63,055



1,325


Net cash provided by (used for) operating activities


427,862



365,402







Cash flows from investing activities:





Purchases of marketable investment securities


(1,452,982)



(2,234,671)


Sales and maturities of marketable investment securities


2,099,815



1,231,790


Expenditures for property and equipment


(352,003)



(295,041)


Expenditures for externally marketed software


(25,634)



(27,824)


Purchase of other investments


(50,000)



(5,500)


Sales of other investments


10,951




Net cash provided by (used for) investing activities


230,147



(1,331,246)







Cash flows from financing activities:





Repurchase and maturity of the 2021 Senior Unsecured Notes


(901,818)




Payment of finance lease obligations


(578)



(606)


Payment of in-orbit incentive obligations


(1,800)



(1,268)


Proceeds from Class A common stock options exercised




983


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


7,288



8,066


Treasury share repurchase


(229,383)



(5,893)


Contribution by non-controlling interest holder


9,880



14,268


Other, net


(966)



998


Net cash provided by (used for) financing activities


(1,117,377)



16,548







Effect of exchange rates on cash and cash equivalents


(3,114)



(8,348)


Net increase (decrease) in cash and cash equivalents


(462,482)



(957,644)


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


$

434,330



$

564,245



 

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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