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