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