Hughes Network Systems LLC

08/03/2021 | Press release | Distributed by Public on 08/03/2021 06:22

EchoStar Announces Financial Results for the Three and Six Months Ended June 30, 2021

Englewood, CO, August 3, 2021-EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ended June 30, 2021.

Three Months Ended June 30, 2021 Financial Highlights:

  • Consolidated revenue of $499.8 million.

  • Net income of $35.0 million, consolidated net income attributable to EchoStar common stock of $37.3 million, and basic and diluted earnings per share of $0.41.

  • Consolidated Adjusted EBITDA of $186.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Six Months Ended June 30, 2021 Financial Highlights:

  • Consolidated revenue of $982.4 million.

  • Net income of $112.6 million, consolidated net income attributable to EchoStar common stock of $115.8 million, and basic and diluted earnings per share of $1.26 and $1.25, respectively.

  • Consolidated Adjusted EBITDA of $372.4 million (see discussion and the reconciliation of GAAP to this non-GAPP measure below).

'Our financial performance in the second quarter of 2021 was outstanding - a reflection of the ongoing commitment and drive of the EchoStar team to deliver solutions that connect the world,' commented Michael Dugan, CEO and President of EchoStar. 'We remain focused on increasing the yield on our existing assets and operating the business in an efficient manner while also building the ground network and operational processes to place our next satellite, EchoStar XXIV/JUPITER 3, into service as quickly as possible. We continue to seek opportunities in pursuit of our strategy of being a global connectivity provider.'

Three Months Ended June 30, 2021 - Additional Information:

  • Consolidated revenue increased 8.8% or $40.4 million year over year primarily driven by higher equipment sales of $26.1 million to our domestic and international enterprise customers and higher sales of broadband services of $12.4 million to our consumer customers.

  • Adjusted EBITDA increased 16.0% or $25.8 million year over year.

    • Hughes segment Adjusted EBITDA increased $21.0 million year over year. The increase was driven primarily by growth in revenue and higher Adjusted EBITDA margin.

    • ESS segment Adjusted EBITDA increased $0.7 million year over year.

    • Corporate and Other segment Adjusted EBITDA increased $4.1 million year over year. The increase was primarily due to decreased losses of unconsolidated affiliates, net, and dividends received from certain marketable investment securities.

  • Net income increased $49.9 million to $35.0 million. The increase was primarily due to higher operating income of $30.5 million and higher gains on investments, net, of $36.7 million, partially offset by higher losses in Other, net of $12.4 million that included litigation expense, and higher income tax expense, net, of $10.3 million.

  • Total Hughes broadband subscribers are approximately 1,542,000 as of June 30, 2021. Subscribers in the US decreased by 20,000 to approximately 1,144,000. In Latin America, subscribers increased by 9,000 to approximately 398,000.

  • For the three months ended June 30, 2021, approximately 67% of Hughes segment revenue was attributable to our consumer customers with approximately 33% attributable to our enterprise customers.

  • Cash, cash equivalents and current marketable investment securities were $1.6 billion as of June 30, 2021.

  • For the three months ended June 30, 2021, we purchased 2,374,452 shares of our Class A common stock in open market trades.

  • Repurchased or paid off the remaining $809.5 million of our 7 5/8% bonds which matured on June 15th, 2021.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and six months ended June 30, 2021 and 2020 (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,

2021

2020

2021

2020

Revenue

Hughes

$

492,276

$

453,172

$

968,136

$

911,654

EchoStar Satellite Services

4,283

4,179

8,372

8,831

Corporate and Other

3,275

2,115

5,908

4,647

Total revenue

$

499,834

$

459,466

$

982,416

$

925,132

Adjusted EBITDA

Hughes

$

207,317

$

186,277

$

409,253

$

348,496

EchoStar Satellite Services

2,243

1,543

4,162

3,573

Corporate & Other:

Corporate overhead, operating and other

(20,497)

(22,252)

(41,964)

(42,375)

Equity in earnings (losses) of unconsolidated affiliates, net

(2,369)

(4,668)

984

(156)

Total Corporate & Other

(22,866)

(26,920)

(40,980)

(42,531)

Total Adjusted EBITDA

$

186,694

$

160,900

$

372,435

$

309,538

Net income (loss)

$

35,015

$

(14,843)

$

112,587

$

(72,580)

Expenditures for property and equipment

$

83,232

$

92,300

$

262,466

$

196,904

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

For the three months ended June 30,

For the six months ended June 30,

2021

2020

2021

2020

Net income (loss)

$

35,015

$

(14,843)

$

112,587

$

(72,580)

Interest income, net

(5,240)

(10,760)

(11,189)

(26,343)

Interest expense, net of amounts capitalized

28,868

38,258

63,535

74,491

Income tax provision (benefit), net

21,152

10,851

43,299

3,359

Depreciation and amortization

118,982

129,887

248,268

262,255

Net loss (income) attributable to non-controlling interests

2,280

3,431

3,227

6,873

EBITDA

201,057

156,824

459,727

248,055

(Gains) losses on investments, net

(30,633)

6,090

(109,233)

52,762

Impairment of long-lived assets

15

-

245

-

Litigation Expense

16,800

-

16,800

-

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

(236)

(454)

(446)

(563)

Loss on Debt Repurchase

356

-

1,938

-

Foreign currency transaction (gains) losses, net

(665)

(1,560)

3,404

9,284

Adjusted EBITDA

$

186,694

$

160,900

$

372,435

$

309,538

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, 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 June 30, 2021 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Tuesday, August 3, 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 9641157.

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.

###

Contact Information

EchoStar Investor Relations

EchoStar Media Relations

Terry Brown

Phone: +1 303-728-5179

Email: [email protected]

Sharyn Nerenberg

Phone: +1 301-428-7124

Email: [email protected]

ECHOSTAR CORPORATION

Consolidated Balance Sheets

(Amounts in thousands, except share and per share amounts)

As of

June 30, 2021

December 31, 2020

Assets

Current assets:

Cash and cash equivalents

$

716,522

$

896,005

Marketable investment securities

841,521

1,638,271

Trade accounts receivable and contract assets, net

186,945

183,989

Other current assets, net

194,095

189,821

Total current assets

1,939,083

2,908,086

Non-current assets:

Property and equipment, net

2,431,653

2,390,313

Operating lease right-of-use assets

131,931

128,303

Goodwill

511,886

511,597

Regulatory authorizations, net

474,770

478,762

Other intangible assets, net

14,773

18,433

Other investments, net

340,688

284,937

Other non-current assets, net

364,822

352,921

Total non-current assets

4,270,523

4,165,266

Total assets

$

6,209,606

$

7,073,352

Liabilities and Stockholders' Equity

Current liabilities:

Trade accounts payable

$

121,635

$

122,366

Current portion of long-term debt, net

-

898,237

Contract liabilities

127,820

104,569

Accrued expenses and other current liabilities

297,649

299,999

Total current liabilities

547,104

1,425,171

Non-current liabilities:

Long-term debt, net

1,495,619

1,495,256

Deferred tax liabilities, net

394,155

359,896

Operating lease liabilities

118,779

114,886

Other non-current liabilities

69,044

70,893

Total non-current liabilities

2,077,597

2,040,931

Total liabilities

2,624,701

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 June 30, 2021 and December 31, 2020

-

-

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, 57,825,270 shares issued and 42,289,277 shares outstanding at June 30, 2021 and 57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 2020

58

57

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, 2021 and December 31, 2020

48

48

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both June 30, 2021 and December 31, 2020

-

-

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both June 30, 2021 and December 31, 2020

-

-

Additional paid-in capital

3,337,190

3,321,426

Accumulated other comprehensive income (loss)

(182,226)

(187,876)

Accumulated earnings (losses)

699,405

583,591

Treasury shares, at cost

(343,869)

(174,912)

Total EchoStar Corporation stockholders' equity

3,510,606

3,542,334

Non-controlling interests

74,299

64,916

Total stockholders' equity

3,584,905

3,607,250

Total liabilities and stockholders' equity

$

6,209,606

$

7,073,352

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

For the three months ended June 30,

For the six months ended June 30,

2021

2020

2021

2020

Revenue:

Services and other revenue

$

431,279

$

417,043

$

861,616

$

825,400

Equipment revenue

68,555

42,423

120,800

99,732

Total revenue

499,834

459,466

982,416

925,132

Costs and expenses:

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

139,547

141,019

272,336

286,271

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

54,503

32,542

99,654

78,450

Selling, general and administrative expenses

114,038

113,798

228,157

239,079

Research and development expenses

7,441

7,448

14,986

13,702

Depreciation and amortization

118,982

129,887

248,268

262,255

Impairment of long-lived assets

15

-

245

-

Total costs and expenses

434,526

424,694

863,646

879,757

Operating income (loss)

65,308

34,772

118,770

45,375

Other income (expense):

Interest income, net

5,240

10,760

11,189

26,343

Interest expense, net of amounts capitalized

(28,868)

(38,258)

(63,535)

(74,491)

Gains (losses) on investments, net

30,633

(6,090)

109,233

(52,762)

Equity in earnings (losses) of unconsolidated affiliates, net

(4,044)

(6,345)

(2,670)

(3,732)

Foreign currency transaction gains (losses), net

665

1,560

(3,404)

(9,284)

Other, net

(12,767)

(391)

(13,697)

(670)

Total other income (expense), net

(9,141)

(38,764)

37,116

(114,596)

Income (loss) before income taxes

56,167

(3,992)

155,886

(69,221)

Income tax benefit (provision), net

(21,152)

(10,851)

(43,299)

(3,359)

Net income (loss)

35,015

(14,843)

112,587

(72,580)

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

2,280

3,431

3,227

6,873

Net income (loss) attributable to EchoStar Corporation common stock

$

37,295

$

(11,412)

$

115,814

$

(65,707)

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

Basic

$

0.41

$

(0.12)

$

1.26

$

(0.67)

Diluted

$

0.41

$

(0.12)

$

1.25

$

(0.67)

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(Amounts in thousands)

For the six months ended June 30,

2021

2020

Cash flows from operating activities:

Net income (loss)

$

112,587

$

(72,580)

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

Depreciation and amortization

248,268

262,255

Impairment of long-lived assets

245

-

Losses (gains) on investments, net

(109,233)

52,762

Equity in losses (earnings) of unconsolidated affiliates, net

2,670

3,732

Foreign currency transaction losses (gains), net

3,404

9,284

Deferred tax provision (benefit), net

34,024

(2,452)

Stock-based compensation

3,825

4,509

Amortization of debt issuance costs

2,008

2,120

Other, net

6,198

(7,295)

Changes in assets and liabilities, net:

Trade accounts receivable and contract assets, net

(3,363)

(5,262)

Other current assets, net

(1,120)

(11,642)

Trade accounts payable

(9,631)

(11,701)

Contract liabilities

23,251

(11,229)

Accrued expenses and other current liabilities

621

27,050

Non-current assets and non-current liabilities, net

(5,114)

5,729

Net cash provided by (used for) operating activities

308,640

245,280

Cash flows from investing activities:

Purchases of marketable investment securities

(939,255)

(555,367)

Sales and maturities of marketable investment securities

1,824,332

977,532

Expenditures for property and equipment

(262,466)

(196,904)

Expenditures for externally marketed software

(16,835)

(19,237)

Purchase of other investments

(50,000)

(5,500)

Sales of other investments

10,516

-

Net cash provided by (used for) investing activities

566,292

200,524

Cash flows from financing activities:

Repurchase and maturity of the 2021 Senior Unsecured Notes

(901,818)

-

Payment of finance lease obligations

(476)

(421)

Payment of in-orbit incentive obligations

(1,431)

(1,021)

Net proceeds from Class A common stock options exercised

-

436

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

4,815

5,300

Treasury share repurchase

(163,822)

(5,893)

Contribution by non-controlling interest holder

9,880

10,000

Other, net

(966)

674

Net cash provided by (used for) financing activities

(1,053,818)

9,075

Effect of exchange rates on cash and cash equivalents

(443)

(19,232)

Net increase (decrease) in cash and cash equivalents

(179,329)

435,647

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

$

717,483

$

1,957,536