ENGLEWOOD, Colo., Nov. 6, 2023
/PRNewswire/ -- EchoStar Corporation (Nasdaq: SATS) announced its
financial results for the three and nine months ended September 30, 2023.
Three Months Ended September 30,
2023 Financial Highlights:
- Consolidated revenue of $413.1 million.
- Net income of $0.5 million,
consolidated net income attributable to EchoStar common stock of
$3.2 million, and basic and
diluted earnings per share of common stock of $0.04.
- Consolidated Adjusted EBITDA of $125.8
million (see discussion and the reconciliation of GAAP to
this non-GAAP measure below).
- Cash, cash equivalents and current marketable investment
securities were $2.0 billion as of
September 30, 2023, up from
$1.9 billion as of June 30, 2023.
Nine months ended September 30,
2023 Financial Highlights:
- Consolidated revenue of $1.3 billion.
- Net income of $37.4 million,
consolidated net income attributable to EchoStar common stock of
$43.4 million, and basic and diluted
earnings per share of common stock of $0.52.
- Consolidated Adjusted EBITDA of $414.1
million (see discussion and the reconciliation of GAAP to
this non-GAAP measure below).
"In the third quarter of 2023, the EchoStar team was fully
engaged across our business. We received orders from new and
existing customers in our enterprise, international, government,
and mobility groups," said Hamid
Akhavan, CEO and President of EchoStar. "Our consumer team
continued to expand adoption of our low-latency HughesNet Fusion
plans and the JUPITER 3/EchoStar XXIV satellite is fully functional
and expected to begin commercial service in December."
Three Months Ended September 30,
2023 - Additional Information:
- Consolidated revenue decreased 17.0% or $84.3 million year over year. The decrease was
driven by lower service revenues of $42.0
million primarily due to fewer broadband customers.
Equipment revenue decreased $42.3
million, primarily due to lower domestic and international
deployments and shipments. Most enterprise orders are
recognized over several years, which can create some variation or
irregularity in our revenue, which we saw in the third
quarter.
- Net income decreased $19.0
million year over year. The decrease was primarily due to a
decrease in operating income driven by lower revenue and higher
transaction costs related to the proposed merger with DISH. These
items were partially offset by higher interest income of
$12.0 million and a favorable change
of $4.7 million in our income tax
provision.
- Adjusted EBITDA decreased 20.8% or $33.0
million year over year.
- Hughes segment Adjusted EBITDA decreased $33.8 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 and lower research and development
expenses.
- ESS segment Adjusted EBITDA increased $1.4 million year over year, primarily due to
higher revenue.
- Corporate and Other Adjusted EBITDA remained relatively flat
year over year.
- Hughes broadband subscribers totaled approximately 1,063,000,
declining 165,000 from December 31,
2022. In the U.S., our current capacity limitations,
increasing bandwidth usage by our existing subscribers, and
competitive pressures are impacting our consumer subscriber
levels. In Latin America, subscriber levels were tempered by
our focus on more profitable consumer subscribers and by our
allocation of capacity to enterprise opportunities.
- For the three months ended September 30,
2023, approximately 37% of Hughes segment revenue was
attributable to our enterprise customers, decreasing from 40% in
the same period last year. Despite this drop in revenue, we
remain committed to growing our Enterprise market. Just
recently, we announced a major deal with Delta Air Lines that will
increase our backlog in the fourth quarter and diversify our
business.
- The JUPITER 3/EchoStar XXIV satellite launched successfully on
July 28, 2023. Currently, the
satellite is in the final stages of in-orbit testing. Service
launch is on schedule for December which will instantly bring over
500 Gbps of capacity over North and South
America.
Set forth below is a table highlighting certain of EchoStar's
segment results for the three and nine months ended
September 30, 2023 and 2022 (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,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Hughes
|
|
$
404,209
|
|
$
489,565
|
|
$ 1,279,739
|
|
$ 1,475,512
|
EchoStar Satellite
Services
|
|
6,446
|
|
4,981
|
|
18,563
|
|
14,305
|
Corporate and
Other
|
|
2,419
|
|
2,841
|
|
7,478
|
|
8,420
|
Total
revenue
|
|
$
413,074
|
|
$
497,387
|
|
$ 1,305,780
|
|
$ 1,498,237
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
532
|
|
$ 19,550
|
|
$ 37,437
|
|
$
118,968
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
Hughes
|
|
$
143,730
|
|
$
177,574
|
|
$
469,007
|
|
$
544,284
|
EchoStar Satellite
Services
|
|
4,867
|
|
3,447
|
|
14,085
|
|
9,658
|
Corporate &
Other
|
|
(22,788)
|
|
(22,202)
|
|
(69,042)
|
|
(61,506)
|
Total Adjusted
EBITDA
|
|
$
125,809
|
|
$
158,819
|
|
$
414,050
|
|
$
492,436
|
|
|
|
|
|
|
|
|
|
Expenditures for
property and equipment, net of refunds and other
receipts
|
|
$ 79,164
|
|
$ 61,457
|
|
$
172,251
|
|
$
249,374
|
Reconciliation of GAAP to Non-GAAP Measurement (amounts in
thousands):
|
|
For the three
months
ended September 30,
|
|
For the nine
months
ended September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
532
|
|
$
19,550
|
|
$
37,437
|
|
$
118,968
|
Interest income,
net
|
|
(26,209)
|
|
(14,183)
|
|
(78,331)
|
|
(29,677)
|
Interest expense, net
of amounts capitalized
|
|
12,650
|
|
13,845
|
|
39,176
|
|
43,125
|
Income tax provision
(benefit), net
|
|
8,547
|
|
13,195
|
|
38,780
|
|
51,367
|
Depreciation and
amortization
|
|
103,028
|
|
110,233
|
|
311,474
|
|
347,224
|
Net loss (income)
attributable to non-controlling interests
|
|
2,712
|
|
2,853
|
|
6,005
|
|
8,736
|
EBITDA
|
|
$
101,260
|
|
$
145,493
|
|
$
354,541
|
|
$
539,743
|
(Gains) losses on
investments, net
|
|
10,743
|
|
10,077
|
|
23,337
|
|
(48,071)
|
Foreign currency
transaction (gains) losses, net
|
|
2,089
|
|
2,805
|
|
(4,482)
|
|
53
|
Impairment of
long-lived assets
|
|
—
|
|
—
|
|
3,142
|
|
711
|
Other-than-temporary
impairment losses on equity method investments
|
|
—
|
|
—
|
|
33,400
|
|
—
|
Merger
costs
|
|
11,717
|
|
—
|
|
11,717
|
|
—
|
Gain on repayment of
other debt securities
|
|
—
|
|
—
|
|
(7,605)
|
|
—
|
License fee dispute -
India, net of non-controlling interests
|
|
—
|
|
444
|
|
—
|
|
—
|
Adjusted
EBITDA
|
|
$
125,809
|
|
$
158,819
|
|
$
414,050
|
|
$
492,436
|
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, 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 September 30, 2023 filed
today with the Securities and Exchange Commission.
EchoStar will host a webcast to discuss its earnings on
Monday, November 6, 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/BIffe2a41bff0e4a198973106da5a17dab.
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 that are described under the
caption "Risk Factors" in EchoStar's Annual Report on Form 10-K for
the period ended December 31, 2022
and subsequent Quarterly Reports on Form 10-Q 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
|
|
|
September 30,
2023
|
|
December 31,
2022
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,094,531
|
|
$
704,541
|
Marketable investment
securities
|
|
894,744
|
|
973,915
|
Trade accounts
receivable and contract assets, net
|
|
235,421
|
|
236,479
|
Other current assets,
net
|
|
248,241
|
|
210,446
|
Total current
assets
|
|
2,472,937
|
|
2,125,381
|
Non-current
assets:
|
|
|
|
|
Property and
equipment, net
|
|
2,144,707
|
|
2,237,617
|
Operating lease
right-of-use assets
|
|
143,726
|
|
151,518
|
Goodwill
|
|
532,710
|
|
532,491
|
Regulatory
authorizations, net
|
|
459,463
|
|
462,531
|
Other intangible
assets, net
|
|
13,975
|
|
15,698
|
Other investments,
net
|
|
136,455
|
|
356,705
|
Other non-current
assets, net
|
|
326,485
|
|
317,062
|
Total non-current
assets
|
|
3,757,521
|
|
4,073,622
|
Total
assets
|
|
$
6,230,458
|
|
$
6,199,003
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
82,291
|
|
$
101,239
|
Contract
liabilities
|
|
122,288
|
|
121,739
|
Accrued expenses and
other current liabilities
|
|
192,100
|
|
199,853
|
Total current
liabilities
|
|
396,679
|
|
422,831
|
Non-current
liabilities:
|
|
|
|
|
Long-term debt,
net
|
|
1,497,396
|
|
1,496,777
|
Deferred tax
liabilities, net
|
|
433,370
|
|
424,621
|
Operating lease
liabilities
|
|
127,829
|
|
135,932
|
Other non-current
liabilities
|
|
109,396
|
|
119,787
|
Total non-current
liabilities
|
|
2,167,991
|
|
2,177,117
|
Total
liabilities
|
|
2,564,670
|
|
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 September 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,
59,532,668 shares issued and 36,219,357 shares outstanding at
September 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
September 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 September 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 September 30, 2023 and
December 31, 2022
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
3,383,671
|
|
3,367,058
|
Accumulated other
comprehensive income (loss)
|
|
(161,515)
|
|
(172,239)
|
Accumulated earnings
(losses)
|
|
876,959
|
|
833,517
|
Treasury shares, at
cost, 23,313,311 at both September 30, 2023 and
December 31, 2022
|
|
(525,824)
|
|
(525,824)
|
Total EchoStar
Corporation stockholders' equity
|
|
3,573,398
|
|
3,502,619
|
Non-controlling
interests
|
|
92,390
|
|
96,436
|
Total stockholders'
equity
|
|
3,665,788
|
|
3,599,055
|
Total liabilities
and stockholders' equity
|
|
$
6,230,458
|
|
$
6,199,003
|
ECHOSTAR CORPORATION
|
Consolidated
Statements of Operations
|
(Unaudited, in
thousands, except per share amounts)
|
|
|
|
For the three
months
ended September 30,
|
|
For the nine
months
ended September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Services and other
revenue
|
|
$ 359,349
|
|
$ 401,382
|
|
$
1,108,386
|
|
$
1,234,890
|
Equipment
revenue
|
|
53,725
|
|
96,005
|
|
197,394
|
|
263,347
|
Total
revenue
|
|
413,074
|
|
497,387
|
|
1,305,780
|
|
1,498,237
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of sales -
services and other (exclusive of depreciation and
amortization)
|
|
133,335
|
|
145,189
|
|
401,431
|
|
430,553
|
Cost of sales -
equipment (exclusive of depreciation and amortization)
|
|
43,180
|
|
74,329
|
|
151,004
|
|
213,497
|
Selling, general and
administrative expenses
|
|
104,988
|
|
111,421
|
|
322,469
|
|
342,682
|
Research and
development expenses
|
|
6,463
|
|
9,181
|
|
21,560
|
|
25,562
|
Depreciation and
amortization
|
|
103,028
|
|
110,233
|
|
311,474
|
|
347,224
|
Impairment of
long-lived assets
|
|
—
|
|
—
|
|
3,142
|
|
711
|
Total costs and
expenses
|
|
390,994
|
|
450,353
|
|
1,211,080
|
|
1,360,229
|
Operating income
(loss)
|
|
22,080
|
|
47,034
|
|
94,700
|
|
138,008
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
26,209
|
|
14,183
|
|
78,331
|
|
29,677
|
Interest expense, net
of amounts capitalized
|
|
(12,650)
|
|
(13,845)
|
|
(39,176)
|
|
(43,125)
|
Gains (losses) on
investments, net
|
|
(10,743)
|
|
(10,077)
|
|
(23,337)
|
|
48,071
|
Equity in earnings
(losses) of unconsolidated affiliates, net
|
|
(1,978)
|
|
(1,426)
|
|
(3,075)
|
|
(4,441)
|
Other-than-temporary
impairment losses on equity method investments
|
|
—
|
|
—
|
|
(33,400)
|
|
—
|
Foreign currency
transaction gains (losses), net
|
|
(2,089)
|
|
(2,805)
|
|
4,482
|
|
(53)
|
Other, net
|
|
(11,750)
|
|
(319)
|
|
(2,308)
|
|
2,198
|
Total other income
(expense), net
|
|
(13,001)
|
|
(14,289)
|
|
(18,483)
|
|
32,327
|
Income (loss) before
income taxes
|
|
9,079
|
|
32,745
|
|
76,217
|
|
170,335
|
Income tax benefit
(provision), net
|
|
(8,547)
|
|
(13,195)
|
|
(38,780)
|
|
(51,367)
|
Net income
(loss)
|
|
532
|
|
19,550
|
|
37,437
|
|
118,968
|
Less: Net loss
(income) attributable to non-controlling interests
|
|
2,712
|
|
2,853
|
|
6,005
|
|
8,736
|
Net income (loss)
attributable to EchoStar Corporation common stock
|
|
$
3,244
|
|
$
22,403
|
|
$
43,442
|
|
$ 127,704
|
|
|
|
|
|
|
|
|
|
Earnings (losses)
per share - Class A and B common stock:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.04
|
|
$
0.27
|
|
$
0.52
|
|
$
1.51
|
Diluted
|
|
$
0.04
|
|
$
0.27
|
|
$
0.52
|
|
$
1.51
|
ECHOSTAR CORPORATION
|
Consolidated
Statements of Cash Flows
|
(Unaudited, in
thousands)
|
|
|
|
For the nine months
ended
September 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
|
$
37,437
|
|
$
118,968
|
Adjustments to
reconcile net income (loss) to cash flows provided by (used for)
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
311,474
|
|
347,224
|
Impairment of
long-lived assets
|
|
3,142
|
|
711
|
Losses (gains) on
investments, net
|
|
23,337
|
|
(48,071)
|
Equity in losses of
unconsolidated affiliates, net
|
|
3,075
|
|
4,441
|
Foreign currency
transaction losses (gains), net
|
|
(4,482)
|
|
53
|
Deferred tax
provision, net
|
|
8,088
|
|
28,901
|
Stock-based
compensation
|
|
8,239
|
|
8,401
|
Amortization of debt
issuance costs
|
|
619
|
|
583
|
Gain on repayment of
other debt securities
|
|
(7,605)
|
|
—
|
Other-than-temporary
impairment losses on equity method investments
|
|
33,400
|
|
—
|
Accretion of discounts
on debt investments
|
|
(21,340)
|
|
159
|
Other, net
|
|
(6,634)
|
|
35,450
|
Changes in assets
and liabilities, net:
|
|
|
|
|
Trade accounts
receivable and contract assets, net
|
|
2,940
|
|
(63,563)
|
Other current assets,
net
|
|
(46,216)
|
|
(26,402)
|
Trade accounts
payable
|
|
(22,817)
|
|
657
|
Contract
liabilities
|
|
549
|
|
(13,759)
|
Accrued expenses and
other current liabilities
|
|
(489)
|
|
(27,004)
|
Non-current assets and
non-current liabilities, net
|
|
(21,694)
|
|
(23,432)
|
Net cash provided by
(used for) operating activities
|
|
301,023
|
|
343,317
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of
marketable investment securities
|
|
(1,015,650)
|
|
(540,447)
|
Sales and maturities
of marketable investment securities
|
|
1,150,683
|
|
917,077
|
Expenditures for
property and equipment
|
|
(206,862)
|
|
(249,374)
|
Refunds and other
receipts related to capital expenditures
|
|
34,611
|
|
—
|
Expenditures for
externally marketed software
|
|
(22,373)
|
|
(16,926)
|
Proceeds from
repayment of other debt investment
|
|
148,448
|
|
—
|
India JV
formation
|
|
—
|
|
(7,892)
|
Dividend received from
unconsolidated affiliate
|
|
—
|
|
2,000
|
Sale of unconsolidated
affiliate
|
|
—
|
|
7,500
|
Sales of other
investments
|
|
—
|
|
3,070
|
Net cash provided by
(used for) investing activities
|
|
88,857
|
|
115,008
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Payment of finance
lease obligations
|
|
—
|
|
(114)
|
Payment of in-orbit
incentive obligations
|
|
(3,144)
|
|
(2,422)
|
Proceeds from Class A
common stock issued under the Employee Stock Purchase
Plan
|
|
2,953
|
|
7,173
|
Payment of equity
registration fees
|
|
(1,327)
|
|
—
|
Treasury share
repurchase
|
|
—
|
|
(89,303)
|
Net cash provided by
(used for) financing activities
|
|
(1,518)
|
|
(84,666)
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
1,622
|
|
(3,123)
|
Net increase (decrease)
in cash and cash equivalents
|
|
389,984
|
|
370,536
|
Cash and cash
equivalents, including restricted amounts, beginning of
period
|
|
705,882
|
|
536,874
|
Cash and cash
equivalents, including restricted amounts, end of period
|
|
$
1,095,866
|
|
$
907,410
|
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SOURCE EchoStar Corporation