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EchoStar Announces Financial Results for the Three and Six Months Ended June 30, 2023

08 August 2023

ENGLEWOOD, Colo., Aug. 8, 2023 /PRNewswire/ -- EchoStar Corporation (Nasdaq: SATS) announced its financial results for the three and six months ended June 30, 2023.

Three Months Ended June 30, 2023 Financial Highlights:

  • Consolidated revenue of $453.1 million.
  • Net income of $9.1 million, consolidated net income attributable to EchoStar common stock of $11.2 million, and basic and diluted earnings per share of common stock of $0.13.
  • Consolidated Adjusted EBITDA of $153.3 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
  • Cash, cash equivalents and current marketable investment securities were $1.9 billion as of June 30, 2023, up from $1.7 billion as of March 31, 2023.

Six months ended June 30, 2023 Financial Highlights:

  • Consolidated revenue of $892.7 million.
  • Net income of $36.9 million, consolidated net income attributable to EchoStar common stock of $40.2 million, and basic and diluted earnings per share of common stock of $0.48.
  • Consolidated Adjusted EBITDA of $288.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"In the second quarter of 2023, the EchoStar team once again delivered a strong performance, ending the quarter with the delivery of the JUPITER 3/EchoStar XXIV satellite to the launch base as scheduled," said Hamid Akhavan, CEO and President of EchoStar. "While optimizing existing assets and pursuing new avenues of growth, the team also planned the JUPITER 3 launch mission in record time – executing it flawlessly and setting us on the path to future growth."

Three Months Ended June 30, 2023 - Additional Information:

  • Consolidated revenue decreased 9.3% or $46.2 million year over year. The decrease was driven by lower service revenues of $43.2 million partially due to fewer broadband customers. Equipment revenue decreased $3.0 million, primarily due to lower sales to both domestic and international enterprise customers, partially offset by an increase in sales to our mobile satellite system customers and positive adjustments on profit margin on long-term contracts.
  • Net income decreased $1.4 million year over year. The decrease was primarily due to an impairment of a certain equity investment of $33.4 million and higher income tax expense of $13.4 million. These items were partially offset by a favorable change in investment losses of $17.1 million, higher interest income of $14.5 million, $6.9 million in foreign exchange gains and $6.7 million in other income due to gain on the repayment from other debt securities.
  • Adjusted EBITDA decreased 8.6% or $14.5 million year over year.
    • Hughes segment Adjusted EBITDA decreased $11.3 million year over year. The decrease was driven primarily by lower service and equipment revenue, partially offset by lower sales and marketing expense from our broadband consumer business.
    • ESS segment Adjusted EBITDA increased $1.0 million year over year, primarily due to higher revenue.
    • Corporate and Other Adjusted EBITDA decreased $4.2 million year over year, primarily due to higher corporate expenses.
  • Hughes broadband subscribers totaled approximately 1,122,000, declining 106,000 from December 31, 2022. Our current capacity limitations, increasing bandwidth usage by approximately 16% year on year on average by our existing U.S subscribers, and competitive pressures are impacting our consumer subscriber levels. In Latin America, subscriber levels were tempered by our focus on more profitable consumer segments and by our allocation of capacity to enterprise opportunities.
  • For the three months ended June 30, 2023, approximately 41% of Hughes segment revenue was attributable to our enterprise customers, increasing from 37% in the same period last year.
  • The JUPITER 3/EchoStar XXIV satellite shipped to the launch site in June and subsequently launched successfully on July 28, 2023. Currently, the satellite is being raised to its orbit, 22,236 miles (35,786 kilometers) above the Earth and to its destination at the 95 degrees west orbital slot. It will undergo extensive bus and payload testing before beginning service in the fourth quarter of this year.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and six months ended June 30, 2023 and 2022 (amounts in thousands) (all US GAAP amounts reference results from operations):

  

For the three months
ended June 30,

 

For the six months
ended June 30,

  

2023

 

2022

 

2023

 

2022

         

Revenue

        

Hughes

 

$   444,335

 

$   491,841

 

$   875,530

 

$   985,947

EchoStar Satellite Services

 

6,120

 

4,850

 

12,117

 

9,324

Corporate and Other

 

2,654

 

2,625

 

5,059

 

5,579

Total revenue

 

$   453,109

 

$   499,316

 

$   892,706

 

$ 1,000,850

         

Net income (loss)

 

$       9,085

 

$     10,473

 

$     36,905

 

$     99,418

         

Adjusted EBITDA

        

Hughes

 

$   171,114

 

$   182,423

 

$   325,277

 

$   366,710

EchoStar Satellite Services

 

4,563

 

3,521

 

9,218

 

6,212

Corporate & Other

 

(22,423)

 

(18,216)

 

(46,254)

 

(39,305)

Total Adjusted EBITDA

 

$   153,254

 

$   167,728

 

$   288,241

 

$   333,617

         

Expenditures for property and equipment, net
of refunds and other receipts

 

$     49,016

 

$     75,779

 

$     93,087

 

$   187,917

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

  

For the three months
ended June 30,

 

For the six months
ended June 30,

  

2023

 

2022

 

2023

 

2022

         

Net income (loss)

 

$      9,085

 

$    10,473

 

$    36,905

 

$    99,418

Interest income, net

 

(23,526)

 

(9,072)

 

(52,122)

 

(15,494)

Interest expense, net of amounts capitalized

 

13,240

 

14,307

 

26,526

 

29,280

Income tax provision (benefit), net

 

18,773

 

5,390

 

30,233

 

38,172

Depreciation and amortization

 

105,588

 

116,555

 

208,446

 

236,991

Net loss (income) attributable to non-controlling interests

 

2,072

 

3,395

 

3,293

 

5,883

EBITDA

 

$   125,232

 

$   141,048

 

$   253,281

 

$   394,250

(Gains) losses on investments, net

 

5,485

 

22,538

 

12,594

 

(58,148)

Foreign currency transaction (gains) losses, net

 

(3,258)

 

3,642

 

(6,571)

 

(2,752)

Impairment of long-lived assets

 

 

711

 

3,142

 

711

Other-than-temporary impairment losses on equity method investments

 

33,400

 

 

33,400

 

Gain on repayment of other debt securities

 

(7,605)

 

 

(7,605)

 

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

 

 

(211)

 

 

(444)

Adjusted EBITDA

 

$   153,254

 

$   167,728

 

$   288,241

 

$   333,617

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 June 30, 2023 and 2022 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 June 30, 2023 filed today with the Securities and Exchange Commission.

EchoStar will host a webcast to discuss its earnings on Tuesday, August 8, 2023 at 11:00 a.m. Eastern Time. The webcast will be broadcast live in listen-only mode on EchoStar's investor relations website at ir.echostar.com.  To participate via telephone and ask a question, participants must register using an online form found at: https://register.vevent.com/register/BIe20855193e2544169ac34ab8964798ff.

About EchoStar Corporation

EchoStar Corporation (Nasdaq: SATS) is a premier technology and networking services provider offering consumer, enterprise, operator and government solutions worldwide under its Hughes®, HughesNet® and EchoStar® brands.  In Europe, EchoStar operates under its EchoStar Mobile Limited subsidiary and in Australia, the Company operates as EchoStar Global Australia.  For more information, visit www.echostar.com and follow EchoStar on social media.

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, 2022 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

(In thousands, except share and per share amounts)

 
  

As of

  

June 30, 2023

 

December 31, 2022

  

(unaudited)

  

Assets

    

Current assets:

    

Cash and cash equivalents

 

$           702,055

 

$           704,541

Marketable investment securities

 

1,211,407

 

973,915

Trade accounts receivable and contract assets, net

 

238,967

 

236,479

Other current assets, net

 

244,347

 

210,446

Total current assets

 

2,396,776

 

2,125,381

Non-current assets:

    

Property and equipment, net

 

2,168,376

 

2,237,617

Operating lease right-of-use assets

 

144,055

 

151,518

Goodwill

 

533,295

 

532,491

Regulatory authorizations, net

 

460,310

 

462,531

Other intangible assets, net

 

14,582

 

15,698

Other investments, net

 

193,432

 

356,705

Other non-current assets, net

 

326,218

 

317,062

Total non-current assets

 

3,840,268

 

4,073,622

Total assets

 

$        6,237,044

 

$        6,199,003

     

Liabilities and Stockholders' Equity

    

Current liabilities:

    

Trade accounts payable

 

$             91,118

 

$           101,239

Contract liabilities

 

107,977

 

121,739

Accrued expenses and other current liabilities

 

199,086

 

199,853

Total current liabilities

 

398,181

 

422,831

Non-current liabilities:

    

Long-term debt, net

 

1,497,187

 

1,496,777

Deferred tax liabilities, net

 

432,877

 

424,621

Operating lease liabilities

 

128,374

 

135,932

Other non-current liabilities

 

109,299

 

119,787

Total non-current liabilities

 

2,167,737

 

2,177,117

Total liabilities

 

2,565,918

 

2,599,948

     

Commitments and contingencies

    
     
     

ECHOSTAR CORPORATION

Consolidated Balance Sheets

(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 June 30, 2023 and December 31, 2022

 

 

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,  59,474,291 shares issued and 36,160,980 shares
outstanding at June 30, 2023 and 58,604,927 shares issued and
35,291,616 shares outstanding at December 31, 2022

 

59

 

59

Class B convertible common stock, $0.001 par value, 800,000,000
shares authorized, 47,687,039 shares issued and outstanding at both
June 30, 2023 and December 31, 2022

 

48

 

48

Class C convertible common stock, $0.001 par value, 800,000,000
shares authorized, none issued and outstanding at both June 30, 2023
and December 31, 2022

 

 

Class D common stock, $0.001 par value, 800,000,000 shares
authorized, none issued and outstanding at both June 30, 2023 and
December 31, 2022

 

 

Additional paid-in capital

 

3,379,997

 

3,367,058

Accumulated other comprehensive income (loss)

 

(153,874)

 

(172,239)

Accumulated earnings (losses)

 

873,715

 

833,517

Treasury shares, at cost, 23,313,311 at both June 30, 2023 and December 31, 2022

 

(525,824)

 

(525,824)

Total EchoStar Corporation stockholders' equity

 

3,574,121

 

3,502,619

Non-controlling interests

 

97,005

 

96,436

Total stockholders' equity

 

3,671,126

 

3,599,055

Total liabilities and stockholders' equity

 

$        6,237,044

 

$        6,199,003

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

 
  

For the three months
ended June 30,

 

For the six months
ended June 30,

  

2023

 

2022

 

2023

 

2022

         

Revenue:

        

Services and other revenue

 

$     371,510

 

$     414,697

 

$     749,037

 

$     833,508

Equipment revenue

 

81,599

 

84,619

 

143,669

 

167,342

Total revenue

 

453,109

 

499,316

 

892,706

 

1,000,850

Costs and expenses:

        

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

 

132,724

 

144,235

 

268,096

 

285,364

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

 

56,162

 

70,054

 

107,824

 

139,168

Selling, general and administrative expenses

 

107,420

 

113,091

 

217,481

 

231,261

Research and development expenses

 

6,842

 

8,764

 

15,097

 

16,381

Depreciation and amortization

 

105,588

 

116,555

 

208,446

 

236,991

Impairment of long-lived assets

 

 

711

 

3,142

 

711

Total costs and expenses

 

408,736

 

453,410

 

820,086

 

909,876

Operating income (loss)

 

44,373

 

45,906

 

72,620

 

90,974

Other income (expense):

        

Interest income, net

 

23,526

 

9,072

 

52,122

 

15,494

Interest expense, net of amounts capitalized

 

(13,240)

 

(14,307)

 

(26,526)

 

(29,280)

Gains (losses) on investments, net

 

(5,485)

 

(22,538)

 

(12,594)

 

58,148

Equity in earnings (losses) of unconsolidated affiliates, net

 

(546)

 

(1,301)

 

(1,097)

 

(3,015)

Other-than-temporary impairment losses on equity method investments

 

(33,400)

 

 

(33,400)

 

Foreign currency transaction gains (losses), net

 

3,258

 

(3,642)

 

6,571

 

2,752

Other, net

 

9,372

 

2,673

 

9,442

 

2,517

Total other income (expense), net

 

(16,515)

 

(30,043)

 

(5,482)

 

46,616

Income (loss) before income taxes

 

27,858

 

15,863

 

67,138

 

137,590

Income tax benefit (provision), net

 

(18,773)

 

(5,390)

 

(30,233)

 

(38,172)

Net income (loss)

 

9,085

 

10,473

 

36,905

 

99,418

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

 

2,072

 

3,395

 

3,293

 

5,883

Net income (loss) attributable to EchoStar Corporation common stock

 

$        11,157

 

$        13,868

 

$        40,198

 

$     105,301

         

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

        

Basic

 

$            0.13

 

$            0.16

 

$            0.48

 

$            1.24

Diluted

 

$            0.13

 

$            0.16

 

$            0.48

 

$            1.24

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 
  

For the six months ended
June 30,

  

2023

 

2022

     

Cash flows from operating activities:

    

Net income (loss)

 

$             36,905

 

$             99,418

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

    

Depreciation and amortization

 

208,446

 

236,991

Impairment of long-lived assets

 

3,142

 

711

Losses (gains) on investments, net

 

12,594

 

(58,148)

Equity in losses of unconsolidated affiliates, net

 

1,097

 

3,015

Foreign currency transaction losses (gains), net

 

(6,571)

 

(2,752)

Deferred tax provision, net

 

7,872

 

24,412

Stock-based compensation

 

5,375

 

5,047

Amortization of debt issuance costs

 

410

 

386

Gain on repayment of other debt securities

 

(7,605)

 

Other-than-temporary impairment losses on equity method investments

 

33,400

 

Other, net

 

(22,498)

 

27,397

Changes in assets and liabilities, net:

    

Trade accounts receivable and contract assets, net

 

975

 

(39,271)

Other current assets, net

 

(41,887)

 

(6,113)

Trade accounts payable

 

(16,771)

 

1,793

Contract liabilities

 

(13,762)

 

(6,487)

Accrued expenses and other current liabilities

 

3,416

 

(10,119)

Non-current assets and non-current liabilities, net

 

(13,580)

 

(24,648)

Net cash provided by (used for) operating activities

 

190,958

 

251,632

     

Cash flows from investing activities:

    

Purchases of marketable investment securities

 

(900,560)

 

(183,529)

Sales and maturities of marketable investment securities

 

663,873

 

669,600

Expenditures for property and equipment

 

(124,458)

 

(187,917)

Refunds and other receipts related to capital expenditures

 

31,371

 

Expenditures for externally marketed software

 

(15,253)

 

(11,967)

Proceeds from repayment of other debt investment

 

148,448

 

India JV formation

 

 

(7,892)

Dividend received from unconsolidated affiliate

 

 

2,000

Net cash provided by (used for) investing activities

 

(196,579)

 

280,295

     

Cash flows from financing activities:

    

Payment of finance lease obligations

 

 

(114)

Payment of in-orbit incentive obligations

 

(2,460)

 

(1,908)

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

 

2,143

 

5,046

Treasury share repurchase

 

 

(77,095)

Net cash provided by (used for) financing activities

 

(317)

 

(74,071)

     

Effect of exchange rates on cash and cash equivalents

 

3,483

 

(728)

Net increase (decrease) in cash and cash equivalents

 

(2,455)

 

457,128

Cash and cash equivalents, including restricted amounts, beginning of period

 

705,883

 

536,874

Cash and cash equivalents, including restricted amounts, end of period

 

$           703,428

 

$           994,002

    

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