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


November 9, 2021


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Englewood, CO, November 9, 2021—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.

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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

 

 

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 September30, 2021 and December31, 2020

 

 

 

 

Common stock, $0.001 par value, 4,000,000,000 shares authorized:

 

 

 

 

ClassA common stock, $0.001 par value, 1,600,000,000 shares authorized, 57,939,820 shares issued and 39,810,942 shares outstanding at September30, 2021 and 57,254,201 shares issued and 48,863,374 shares outstanding at December31, 2020

 

58

 

 

57

 

ClassB convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both September30, 2021 and December31, 2020

 

48

 

 

48

 

ClassC convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September30, 2021 and December31, 2020

 

 

 

 

ClassD common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September30, 2021 and December31, 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 - ClassA 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 ClassA 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