ENGLEWOOD, Colo., May 8, 2023
/PRNewswire/ -- EchoStar Corporation (Nasdaq: SATS) announced its
financial results for the three months ended March 31,
2023.
Three Months Ended March 31,
2023 Financial Highlights:
- Consolidated revenue of $439.6
million.
- Net income of $27.8 million,
consolidated net income attributable to EchoStar common stock of
$29.0 million, and basic and diluted
earnings per share of common stock of $0.35.
- Consolidated Adjusted EBITDA of $135.0
million (see discussion and the reconciliation of GAAP to
this non-GAAP measure below).
"In the first quarter of 2023, the EchoStar team performed as
planned, with a focus on optimizing our existing assets and market
opportunities efficiently," said Hamid
Akhavan, CEO and President of EchoStar. "The business
continues to pursue new avenues of growth, laying the operational
foundation to drive increased revenues once our upcoming EchoStar
XXIV/JUPITER™ 3 satellite enters into service and taking tangible
steps toward fulfilling our vision of a global 5G network in the
S-band."
Three Months Ended March 31,
2023 - Additional Information:
- Consolidated revenue decreased 12.3% or $61.9 million year over year. The decrease was
driven by lower service revenues of $41.3
million partially due to fewer broadband customers.
Equipment sales decreased $20.7
million, primarily due to lower sales to both domestic and
international enterprise customers.
- Net income decreased $61.1
million year over year. The decrease was due to lower
operating income of $16.8 million and
an unfavorable change in investments of $87.8 million due to $80.7
million of gains that occurred in 2022. These items were
partially offset by a favorable change in interest income of
$22.2 million and lower net income
tax expense of $21.3 million.
- Adjusted EBITDA decreased 18.6% or $30.9
million year over year.
-
- Hughes segment Adjusted EBITDA decreased $30.1 million year over year. The decrease was
driven primarily by lower service and equipment revenue, partially
offset by lower sales and marketing expense for our broadband
consumer business.
- ESS segment Adjusted EBITDA increased $2.0 million year over year primarily due to
higher revenue.
- Corporate and Other segment Adjusted EBITDA decreased
$2.7 million year over year. The
decrease was primarily due to higher corporate expenses, partially
offset by higher earnings of unconsolidated affiliates, net, of
$0.4 million.
- Hughes broadband subscribers totaled approximately 1,177,000,
declining 51,000 from December 31,
2022. Our current capacity limitations, increasing bandwidth
usage by approximately 15% 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 March 31,
2023, approximately 37% of Hughes segment revenue was
attributable to our enterprise customers, increasing from 36% in
the same period last year.
- Cash, cash equivalents and current marketable investment
securities were $1.7 billion as of
March 31, 2023.
- The JUPITER 3/EchoStar XXIV satellite is currently expected to
be shipped to the launch site in June and subsequently launched at
the first window that SpaceX can allocate to it, which is subject
to preemption by certain higher-priority government launches.
Set forth below is a table highlighting certain of EchoStar's
segment results for the three months ended March 31,
2023 and 2022 (amounts in thousands) (all US GAAP amounts reference
results from operations):
|
|
For the three months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Revenue
|
|
|
|
|
Hughes
|
|
$
431,195
|
|
$
494,106
|
EchoStar Satellite
Services
|
|
5,997
|
|
$
4,474
|
Corporate and
Other
|
|
2,405
|
|
$
2,954
|
Total
revenue
|
|
$
439,597
|
|
$
501,534
|
|
|
|
|
|
Net income
(loss)
|
|
$
27,820
|
|
$
88,945
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
Hughes
|
|
$
154,164
|
|
$
184,287
|
EchoStar Satellite
Services
|
|
4,655
|
|
$
2,691
|
Corporate &
Other
|
|
(23,832)
|
|
$
(21,089)
|
Total Adjusted
EBITDA
|
|
$
134,987
|
|
$
165,889
|
|
|
|
|
|
Expenditures for
property and equipment, net of refunds and other
receipts
|
|
$
44,071
|
|
$
112,138
|
Reconciliation of GAAP
to Non-GAAP Measurement (amounts in thousands):
|
|
|
|
For the three months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Net income
(loss)
|
|
$
27,820
|
|
$
88,945
|
Interest income,
net
|
|
(28,596)
|
|
(6,422)
|
Interest expense, net
of amounts capitalized
|
|
13,286
|
|
14,973
|
Income tax provision
(benefit), net
|
|
11,460
|
|
32,782
|
Depreciation and
amortization
|
|
102,858
|
|
120,436
|
Net loss (income)
attributable to non-controlling interests
|
|
1,221
|
|
2,488
|
EBITDA
|
|
128,049
|
|
253,202
|
(Gains) losses on
investments, net
|
|
7,109
|
|
(80,686)
|
Impairment of
long-lived assets
|
|
3,142
|
|
—
|
License fee dispute -
India, net of non-controlling interests
|
|
—
|
|
(233)
|
Foreign currency
transaction (gains) losses, net
|
|
(3,313)
|
|
(6,394)
|
Adjusted
EBITDA
|
|
134,987
|
|
165,889
|
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 March 31, 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 March 31, 2023 filed today with the Securities
and Exchange Commission.
EchoStar will host a conference call to discuss its earnings on
Tuesday, May 9, 2023 at 8:30 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 an
online form found at:
https://register.vevent.com/register/BI60954a97734841e7aa2eaffe6e4ad436.
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, 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
(Amounts in
thousands, except share and per share amounts)
|
|
|
|
As of
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
920,105
|
|
$
704,541
|
Marketable investment
securities
|
|
755,169
|
|
973,915
|
Trade accounts
receivable and contract assets, net
|
|
251,871
|
|
236,479
|
Other current assets,
net
|
|
252,596
|
|
210,446
|
Total current
assets
|
|
2,179,741
|
|
2,125,381
|
Non-current
assets:
|
|
|
|
|
Property and
equipment, net
|
|
2,175,861
|
|
2,237,617
|
Operating lease
right-of-use assets
|
|
147,707
|
|
151,518
|
Goodwill
|
|
532,858
|
|
532,491
|
Regulatory
authorizations, net
|
|
461,556
|
|
462,531
|
Other intangible
assets, net
|
|
15,151
|
|
15,698
|
Other investments,
net
|
|
364,954
|
|
356,705
|
Other non-current
assets, net
|
|
315,960
|
|
317,062
|
Total non-current
assets
|
|
4,014,047
|
|
4,073,622
|
Total
assets
|
|
$
6,193,788
|
|
$
6,199,003
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
85,772
|
|
$
101,239
|
Contract
liabilities
|
|
129,292
|
|
121,739
|
Accrued expenses and
other current liabilities
|
|
163,109
|
|
199,853
|
Total current
liabilities
|
|
378,173
|
|
422,831
|
Non-current
liabilities:
|
|
|
|
|
Long-term debt,
net
|
|
1,496,981
|
|
1,496,777
|
Deferred tax
liabilities, net
|
|
430,957
|
|
424,621
|
Operating lease
liabilities
|
|
131,881
|
|
135,932
|
Other non-current
liabilities
|
|
112,534
|
|
119,787
|
Total non-current
liabilities
|
|
2,172,353
|
|
2,177,117
|
Total
liabilities
|
|
2,550,526
|
|
2,599,948
|
|
|
|
|
|
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 March 31, 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, 59,303,237 shares issued and 35,989,926
shares
outstanding at March 31, 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
March 31, 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
March 31,
2023 and December 31, 2022
|
|
—
|
|
—
|
Class D common
stock, $0.001 par value, 800,000,000 shares
authorized, none issued and outstanding at both March 31, 2023
and
December 31, 2022
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
3,376,169
|
|
3,367,058
|
Accumulated other
comprehensive income (loss)
|
|
(166,931)
|
|
(172,239)
|
Accumulated earnings
(losses)
|
|
862,558
|
|
833,517
|
Treasury shares, at
cost, 23,313,311 at both March 31, 2023 and December 31,
2022
|
|
(525,824)
|
|
(525,824)
|
Total EchoStar
Corporation stockholders' equity
|
|
3,546,079
|
|
3,502,619
|
Non-controlling
interests
|
|
97,183
|
|
96,436
|
Total stockholders'
equity
|
|
3,643,262
|
|
3,599,055
|
Total liabilities
and stockholders' equity
|
|
$
6,193,788
|
|
$
6,199,003
|
ECHOSTAR
CORPORATION
Consolidated
Statements of Operations
(Amounts in
thousands, except per share amounts)
(unaudited)
|
|
|
|
For the three months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Services and other
revenue
|
|
$
377,527
|
|
$
418,811
|
Equipment
revenue
|
|
62,070
|
|
82,723
|
Total
revenue
|
|
439,597
|
|
501,534
|
Costs and
expenses:
|
|
|
|
|
Cost of sales -
services and other (exclusive of depreciation and
amortization)
|
|
135,372
|
|
141,129
|
Cost of sales -
equipment (exclusive of depreciation and amortization)
|
|
51,662
|
|
69,114
|
Selling, general and
administrative expenses
|
|
110,061
|
|
118,170
|
Research and
development expenses
|
|
8,255
|
|
7,617
|
Depreciation and
amortization
|
|
102,858
|
|
120,436
|
Impairment of
long-lived assets
|
|
3,142
|
|
—
|
Total costs and
expenses
|
|
411,350
|
|
456,466
|
Operating income
(loss)
|
|
28,247
|
|
45,068
|
Other income
(expense):
|
|
|
|
|
Interest income,
net
|
|
28,596
|
|
6,422
|
Interest expense, net
of amounts capitalized
|
|
(13,286)
|
|
(14,973)
|
Gains (losses) on
investments, net
|
|
(7,109)
|
|
80,686
|
Equity in earnings
(losses) of unconsolidated affiliates, net
|
|
(551)
|
|
(1,714)
|
Foreign currency
transaction gains (losses), net
|
|
3,313
|
|
6,394
|
Other, net
|
|
70
|
|
(156)
|
Total other income
(expense), net
|
|
11,033
|
|
76,659
|
Income (loss) before
income taxes
|
|
39,280
|
|
121,727
|
Income tax benefit
(provision), net
|
|
(11,460)
|
|
(32,782)
|
Net income
(loss)
|
|
27,820
|
|
88,945
|
Less: Net loss
(income) attributable to non-controlling interests
|
|
1,221
|
|
2,488
|
Net income (loss)
attributable to EchoStar Corporation common stock
|
|
$
29,041
|
|
$
91,433
|
|
|
|
|
|
Earnings (losses) per
share:
|
|
|
|
|
Basic
|
|
$
0.35
|
|
$
1.07
|
Diluted
|
|
$
0.35
|
|
$
1.06
|
ECHOSTAR
CORPORATION
Consolidated
Statements of Cash Flows
(Amounts in
thousands)
(unaudited)
|
|
|
|
For the three months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
|
$
27,820
|
|
$
88,945
|
Adjustments to
reconcile net income (loss) to cash flows provided
by (used for) operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
102,858
|
|
120,436
|
Impairment of
long-lived assets
|
|
3,142
|
|
—
|
Losses (gains) on
investments, net
|
|
7,109
|
|
(80,686)
|
Equity in losses
(earnings) of unconsolidated affiliates, net
|
|
551
|
|
1,714
|
Foreign currency
transaction losses (gains), net
|
|
(3,313)
|
|
(6,394)
|
Deferred tax provision
(benefit), net
|
|
6,521
|
|
25,538
|
Stock-based
compensation
|
|
2,592
|
|
1,860
|
Amortization of debt
issuance costs
|
|
204
|
|
191
|
Other, net
|
|
(24,078)
|
|
(2,528)
|
Changes in assets
and liabilities, net:
|
|
|
|
|
Trade accounts
receivable and contract assets, net
|
|
(14,041)
|
|
(8,480)
|
Other current assets,
net
|
|
(27,153)
|
|
(3,340)
|
Trade accounts
payable
|
|
(13,797)
|
|
7,046
|
Contract
liabilities
|
|
7,553
|
|
(3,142)
|
Accrued expenses and
other current liabilities
|
|
(28,257)
|
|
(27,033)
|
Non-current assets and
non-current liabilities, net
|
|
(1,286)
|
|
(9,774)
|
Net cash provided by
(used for) operating activities
|
|
46,425
|
|
104,353
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of
marketable investment securities
|
|
(238,585)
|
|
(88,578)
|
Sales and maturities
of marketable investment securities
|
|
457,776
|
|
492,812
|
Expenditures for
property and equipment
|
|
(59,071)
|
|
(112,138)
|
Refunds and other
receipts related to capital expenditures
|
|
15,000
|
|
—
|
Expenditures for
externally marketed software
|
|
(6,962)
|
|
(5,093)
|
India JV
formation
|
|
—
|
|
(7,892)
|
Net cash provided by
(used for) investing activities
|
|
168,158
|
|
279,111
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Payment of finance
lease obligations
|
|
—
|
|
(85)
|
Payment of in-orbit
incentive obligations
|
|
(1,834)
|
|
(1,444)
|
Proceeds from Class A
common stock issued under the Employee Stock
Purchase Plan
|
|
1,098
|
|
2,367
|
Treasury share
repurchase
|
|
—
|
|
(33,307)
|
Net cash provided by
(used for) financing activities
|
|
(736)
|
|
(32,469)
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
1,659
|
|
3,480
|
Net increase (decrease)
in cash and cash equivalents
|
|
215,506
|
|
354,475
|
Cash and cash
equivalents, including restricted amounts, beginning of
period
|
|
705,883
|
|
536,874
|
Cash and cash
equivalents, including restricted amounts, end of period
|
|
$
921,389
|
|
$
891,349
|
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SOURCE EchoStar Corporation