ENGLEWOOD, Colo., Nov. 2, 2022 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) announced its financial results for the three and nine months ended September 30, 2022.
Three Months Ended September 30, 2022 Financial Highlights:
- Consolidated revenue of $497.4 million.
- Consolidated net income of $19.6 million, consolidated net income attributable to EchoStar common stock of $22.4 million and basic and diluted earnings per share of common stock of $0.27.
- Consolidated Adjusted EBITDA of $158.8 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
Nine Months Ended September 30, 2022 Financial Highlights:
- Consolidated revenue of $1,498.2 million.
- Consolidated net income of $119.0 million, consolidated net income attributable to EchoStar common stock of $127.7 million, and basic and diluted earnings per share of common stock of $1.51.
- Consolidated Adjusted EBITDA of $492.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
"During the third quarter of 2022, the EchoStar team continued to optimize operations and asset yields, delivering a solid performance," said Hamid Akhavan, CEO and President of EchoStar. "We remain focused on operating the business in an efficient manner while also preparing for the launch of our EchoStar XXIV/JUPITER 3 satellite. We have capitalized on enterprise market opportunities, and I am pleased that we have increased sales of equipment, primarily developed in-house, for both the three and nine month periods ending September 30, compared to the same periods last year. We continue to seek opportunities in pursuit of our strategy of being a global connectivity and services provider."
Three Months Ended September 30, 2022 - Additional Information:
- Consolidated revenue decreased 1.4% or $7.3 million year over year. Lower service revenue of $31.4 million, primarily due to lower broadband consumer customers, was partially offset by higher equipment sales of $24.1 million to our domestic and international enterprise customers. The decrease includes an estimated negative foreign exchange impact of $3.8 million.
- Consolidated net income decreased $10.7 million year over year. The decrease was primarily due to lower operating income of $15.6 million and an unfavorable change in investments of $13.8 million. These items were partially offset by lower net interest expense of $10.9 million, lower net income tax expense of $6.6 million, and lower losses on foreign exchange of $3.8 million.
- Consolidated Adjusted EBITDA decreased 15.1% or $28.2 million year over year.
- Hughes segment adjusted EBITDA decreased $25.4 million year over year. The decrease was driven by lower gross margin due primarily to a change in revenue mix.
- ESS segment adjusted EBITDA increased $1.1 million year over year.
- Corporate and Other segment adjusted EBITDA decreased $3.9 million year over year. The decrease was primarily due to higher corporate expenses and lower earnings of unconsolidated affiliates, net, of $1.3 million.
- Hughes broadband subscribers totaled approximately 1,285,000, declining 61,000 from June 30, 2022. Current capacity limitations as well as competitive pressures are impacting consumer subscriber levels. In Latin America, subscriber levels were also impacted by adverse economic conditions, more selective customer screening, and capacity allocation to higher economic value enterprise and government applications.
- For the three months ended September 30, 2022, approximately 60% of Hughes segment revenue was attributable to consumer customers with approximately 40% attributable to enterprise customers.
- Cash, cash equivalents and current marketable investment securities were $1.6 billion as of September 30, 2022.
- During the three months ended September 30, 2022, we purchased 593,643 shares of our Class A common stock in open market trades.
- The JUPITER 3/EchoStar XXIV satellite continues to progress at Maxar and is expected to be launched during the first half of 2023
Set forth below is a table highlighting certain of EchoStar's segment results for the three and nine months ended September 30, 2022 and 2021 (amounts in thousands) (all US GAAP amounts reference results from operations):
For the three months ended September 30, | For the nine monthsended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenue | ||||||||
Hughes | $ 489,565 | $ 496,937 | $ 1,475,512 | $ 1,465,073 | ||||
EchoStar Satellite Services | 4,981 | 4,436 | 14,305 | 12,808 | ||||
Corporate and Other | 2,841 | 3,287 | 8,420 | 9,195 | ||||
Total revenue | $ 497,387 | $ 504,660 | $ 1,498,237 | $ 1,487,076 | ||||
Adjusted EBITDA | ||||||||
Hughes | $ 177,574 | $ 202,997 | $ 544,284 | $ 612,251 | ||||
EchoStar Satellite Services | 3,447 | 2,319 | 9,658 | 6,481 | ||||
Corporate & Other: | ||||||||
Corporate overhead, operating and other | (22,521) | (19,974) | (62,265) | (61,940) | ||||
Equity in earnings (losses) of unconsolidated affiliates, net | 319 | 1,630 | 759 | 2,615 | ||||
Total Corporate & Other | (22,202) | (18,344) | (61,506) | (59,325) | ||||
Total Adjusted EBITDA | $ 158,819 | $ 186,972 | $ 492,436 | $ 559,407 | ||||
Net income (loss) | $ 19,550 | $ 30,217 | $ 118,968 | $ 142,804 | ||||
Expenditures for property and equipment | $ 61,457 | $ 89,537 | $ 249,374 | $ 352,003 | ||||
Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):
For the three monthsended September 30, | For the nine months ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income (loss) | $ 19,550 | $ 30,217 | $ 118,968 | $ 142,804 | ||||
Interest income, net | (14,183) | (5,725) | (29,677) | (16,914) | ||||
Interest expense, net of amounts capitalized | 13,845 | 16,313 | 43,125 | 79,848 | ||||
Income tax provision (benefit), net | 13,195 | 19,748 | 51,367 | 63,047 | ||||
Depreciation and amortization | 110,233 | 120,596 | 347,224 | 368,864 | ||||
Net loss (income) attributable to non-controlling interests | 2,853 | 3,192 | 8,736 | 6,419 | ||||
EBITDA | 145,493 | 184,341 | 539,743 | 644,068 | ||||
(Gains) losses on investments, net | 10,077 | (3,748) | (48,071) | (112,981) | ||||
Impairment of long-lived assets | — | — | 711 | 245 | ||||
Litigation Expense | — | — | — | 16,800 | ||||
License fee dispute - India, net of non-controlling interests | 444 | (262) | — | (708) | ||||
Loss on Debt Repurchase | — | — | — | 1,938 | ||||
Foreign currency transaction (gains) losses,net | 2,805 | 6,641 | 53 | 10,045 | ||||
Adjusted EBITDA | $ 158,819 | $ 186,972 | $ 492,436 | $ 559,407 | ||||
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, 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 September 30, 2022 filed today with the Securities and Exchange Commission.
EchoStar will host a conference call to discuss its earnings on Thursday, November 3, 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 participate via telephone and ask a question, participants must register using this online form.
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 CORPORATIONConsolidated Balance Sheets(Amounts in thousands, except share and per share amounts) | ||||
As of | ||||
September 30, 2022 | December 31, 2021 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 901,269 | $ 535,894 | ||
Marketable investment securities | 666,904 | 1,010,496 | ||
Trade accounts receivable and contract assets, net | 243,683 | 182,063 | ||
Other current assets, net | 229,214 | 198,444 | ||
Total current assets | 2,041,070 | 1,926,897 | ||
Non-current assets: | ||||
Property and equipment, net | 2,251,258 | 2,338,285 | ||
Operating lease right-of-use assets | 147,811 | 149,198 | ||
Goodwill | 532,570 | 511,086 | ||
Regulatory authorizations, net | 460,084 | 469,766 | ||
Other intangible assets, net | 16,323 | 13,984 | ||
Other investments, net | 352,778 | 297,747 | ||
Other non-current assets, net | 323,411 | 338,241 | ||
Total non-current assets | 4,084,235 | 4,118,307 | ||
Total assets | $ 6,125,305 | $ 6,045,204 | ||
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Trade accounts payable | $ 95,019 | $ 109,338 | ||
Contract liabilities | 127,584 | 141,343 | ||
Accrued expenses and other current liabilities | 183,613 | 209,442 | ||
Total current liabilities | 406,216 | 460,123 | ||
Non-current liabilities: | ||||
Long-term debt, net | 1,496,578 | 1,495,994 | ||
Deferred tax liabilities, net | 434,043 | 403,684 | ||
Operating lease liabilities | 133,197 | 134,897 | ||
Other non-current liabilities | 119,719 | 136,426 | ||
Total non-current liabilities | 2,183,537 | 2,171,001 | ||
Total liabilities | 2,589,753 | 2,631,124 | ||
Commitments and contingencies | ||||
ECHOSTAR CORPORATIONConsolidated Balance Sheets(Amounts in thousands, except share and per share amounts) | ||||
Stockholders' equity: | ||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized, noneissued and outstanding at both September 30, 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, 58,604,927 shares issued and 35,291,616 shares outstanding at September 30, 2022 and 58,059,622 shares issued and 38,726,923 shares outstanding at December 31, 2021 | 59 | 58 | ||
Class B convertible common stock, $0.001 par value, 800,000,000shares authorized, 47,687,039 shares issued and outstanding at both September 30, 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 September 30, 2022 and December 31, 2021 | — | — | ||
Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2022 and December 31, 2021 | — | — | ||
Additional paid-in capital | 3,361,219 | 3,345,878 | ||
Accumulated other comprehensive income (loss) | (180,339) | (212,102) | ||
Accumulated earnings (losses) | 784,170 | 656,466 | ||
Treasury shares, at cost | (525,824) | (436,521) | ||
Total EchoStar Corporation stockholders' equity | 3,439,333 | 3,353,827 | ||
Non-controlling interests | 96,219 | 60,253 | ||
Total stockholders' equity | 3,535,552 | 3,414,080 | ||
Total liabilities and stockholders' equity | $ 6,125,305 | $ 6,045,204 | ||
ECHOSTAR CORPORATIONConsolidated Statements of Operations(Amounts in thousands, except per share amounts) | |||||||
For the three months ended September 30, | For the nine months ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue: | |||||||
Services and other revenue | $ 401,382 | $ 432,739 | $ 1,234,890 | $ 1,294,355 | |||
Equipment revenue | 96,005 | 71,921 | 263,347 | 192,721 | |||
Total revenue | 497,387 | 504,660 | 1,498,237 | 1,487,076 | |||
Costs and expenses: | |||||||
Cost of sales - services and other (exclusive of depreciation and amortization) | 145,189 | 138,179 | 430,553 | 410,515 | |||
Cost of sales - equipment (exclusive of depreciation and amortization) | 74,329 | 62,328 | 213,497 | 161,982 | |||
Selling, general and administrative expenses | 111,421 | 112,986 | 342,682 | 341,143 | |||
Research and development expenses | 9,181 | 7,974 | 25,562 | 22,960 | |||
Depreciation and amortization | 110,233 | 120,596 | 347,224 | 368,864 | |||
Impairment of long-lived assets | — | — | 711 | 245 | |||
Total costs and expenses | 450,353 | 442,063 | 1,360,229 | 1,305,709 | |||
Operating income (loss) | 47,034 | 62,597 | 138,008 | 181,367 | |||
Other income (expense): | |||||||
Interest income, net | 14,183 | 5,725 | 29,677 | 16,914 | |||
Interest expense, net of amounts capitalized | (13,845) | (16,313) | (43,125) | (79,848) | |||
Gains (losses) on investments, net | (10,077) | 3,748 | 48,071 | 112,981 | |||
Equity in earnings (losses) of unconsolidatedaffiliates, net | (1,426) | 74 | (4,441) | (2,596) | |||
Foreign currency transaction gains (losses), net | (2,805) | (6,641) | (53) | (10,045) | |||
Other, net | (319) | 775 | 2,198 | (12,922) | |||
Total other income (expense), net | (14,289) | (12,632) | 32,327 | 24,484 | |||
Income (loss) before income taxes | 32,745 | 49,965 | 170,335 | 205,851 | |||
Income tax benefit (provision), net | (13,195) | (19,748) | (51,367) | (63,047) | |||
Net income (loss) | 19,550 | 30,217 | 118,968 | 142,804 | |||
Less: Net loss (income) attributable to non-controllinginterests | 2,853 | 3,192 | 8,736 | 6,419 | |||
Net income (loss) attributable to EchoStar Corporation common stock | $ 22,403 | $ 33,409 | $ 127,704 | $ 149,223 | |||
Earnings (losses) per share - Class A and B common stock: | |||||||
Basic | $ 0.27 | $ 0.38 | $ 1.51 | $ 1.64 | |||
Diluted | $ 0.27 | $ 0.38 | $ 1.51 | $ 1.64 | |||
ECHOSTAR CORPORATIONConsolidated Statements of Cash Flows(Amounts in thousands) | ||||
For the nine months ended September 30, | ||||
2022 | 2021 | |||
Cash flows from operating activities: | ||||
Net income (loss) | $ 118,968 | $ 142,804 | ||
Adjustments to reconcile net income (loss) to cash flows provided by (used for) operating activities: | ||||
Depreciation and amortization | 347,224 | 368,864 | ||
Impairment of long-lived assets | 711 | 245 | ||
Losses (gains) on investments, net | (48,071) | (112,981) | ||
Equity in losses (earnings) of unconsolidated affiliates, net | 4,441 | 2,596 | ||
Foreign currency transaction losses (gains), net | 53 | 10,045 | ||
Deferred tax provision (benefit), net | 28,901 | 45,950 | ||
Stock-based compensation | 8,401 | 5,913 | ||
Amortization of debt issuance costs | 583 | 2,192 | ||
Other, net | 35,609 | 16,691 | ||
Changes in assets and liabilities, net: | ||||
Trade accounts receivable and contract assets, net | (63,563) | (20,894) | ||
Other current assets, net | (26,402) | (7,841) | ||
Trade accounts payable | 657 | (15,386) | ||
Contract liabilities | (13,759) | 30,066 | ||
Accrued expenses and other current liabilities | (27,004) | (103,457) | ||
Non-current assets and non-current liabilities, net | (23,432) | 63,055 | ||
Net cash provided by (used for) operating activities | 343,317 | 427,862 | ||
Cash flows from investing activities: | ||||
Purchases of marketable investment securities | (540,447) | (1,452,982) | ||
Sales and maturities of marketable investment securities | 917,077 | 2,099,815 | ||
Expenditures for property and equipment | (249,374) | (352,003) | ||
Expenditures for externally marketed software | (16,926) | (25,634) | ||
India JV formation | (7,892) | — | ||
Dividend received from unconsolidated affiliate | 2,000 | — | ||
Sale of unconsolidated affiliate | 7,500 | — | ||
Purchase of other investments | — | (50,000) | ||
Sales of other investments | 3,070 | 10,951 | ||
Net cash provided by (used for) investing activities | 115,008 | 230,147 | ||
Cash flows from financing activities: | ||||
Repurchase and maturity of the 2021 Senior Unsecured Notes | — | (901,818) | ||
Payment of finance lease obligations | (114) | (578) | ||
Payment of in-orbit incentive obligations | (2,422) | (1,800) | ||
Proceeds from Class A common stock issued under the Employee Stock Purchase Plan | 7,173 | 7,288 | ||
Treasury share repurchase | (89,303) | (229,383) | ||
Contribution by non-controlling interest holder | — | 9,880 | ||
Other, net | — | (966) | ||
Net cash provided by (used for) financing activities | (84,666) | (1,117,377) | ||
Effect of exchange rates on cash and cash equivalents | (3,123) | (3,114) | ||
Net increase (decrease) in cash and cash equivalents | 370,536 | (462,482) | ||
Cash and cash equivalents, including restricted amounts, beginning of period | 536,874 | 896,812 | ||
Cash and cash equivalents, including restricted amounts, end of period | $ 907,410 | $ 434,330 | ||
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SOURCE EchoStar Corporation