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EchoStar Announces Financial Results for the Three and Six Months Ended June 30, 2022

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EchoStar Corporation (NASDAQ: SATS) reported its financial results for the second quarter and first half of 2022. The company achieved consolidated revenue of $499.3 million for Q2 and $1,000.9 million for H1, with a net income of $10.5 million and $99.4 million respectively. However, Adjusted EBITDA fell by 10.2% year-over-year. The Hughes segment faced challenges with a decline of 60,000 subscribers, attributed to competitive pressures and capacity limitations. The company maintained a strong cash position with $1.5 billion in cash equivalents.

Positive
  • Consolidated revenue of $499.3 million for Q2, marking stability year-over-year.
  • Net income of $10.5 million for Q2 and $99.4 million for H1.
  • Strong cash position with $1.5 billion in cash equivalents.
  • Increased Adjusted EBITDA from Corporate and Other segment by $4.6 million.
Negative
  • Adjusted EBITDA decreased by 10.2% year-over-year, down $19 million.
  • Decline of 60,000 subscribers in the Hughes segment due to capacity constraints and competitive pressures.
  • Net income decreased by $24.5 million year-over-year.

ENGLEWOOD, Colo., Aug. 4, 2022 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) announced its financial results for the three and six months ended June 30, 2022.

Three Months Ended June 30, 2022 Financial Highlights:

  • Consolidated revenue of $499.3 million.

  • Net income of $10.5 million, consolidated net income attributable to EchoStar common stock of $13.9 million and basic and diluted earnings per share of common stock of $0.16.

  • Consolidated Adjusted EBITDA of $167.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Six Months Ended June 30, 2022 Financial Highlights:

  • Consolidated revenue of $1,000.9 million.

  • Net income of $99.4 million, consolidated net income attributable to EchoStar common stock of $105.3 million, and basic and diluted earnings per share of common stock of $1.24.

  • Consolidated Adjusted EBITDA of $333.6 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"Once again, the EchoStar team delivered a solid performance in the second quarter," said Hamid Akhavan, CEO and President of EchoStar.  "We are focused on optimizing operations and asset yields in order to maintain our track record of excellent fiscal responsibility, and are leveraging our engineering expertise to innovate new solutions and applications across the market segments we serve."

Three Months Ended June 30, 2022 - Additional Information:

  • Consolidated revenue was flat year over year. Higher equipment sales of $16.1 million to our domestic and international enterprise customers was offset by lower service revenues of $16.6 million, primarily due to lower broadband consumer customers.

  • Adjusted EBITDA decreased 10.2% or $19.0 million year over year.

    • Hughes segment Adjusted EBITDA decreased $24.9 million year over year. The decrease was driven primarily by lower gross margin due to a change in revenue mix.

    • ESS segment Adjusted EBITDA increased $1.3 million year over year.

    • Corporate and Other segment Adjusted EBITDA increased $4.6 million year over year. The increase was primarily due to higher earnings of unconsolidated affiliates, net, of $2.7 million and lower legal expenses.

  • Net income decreased $24.5 million year over year. The decrease was primarily due to an unfavorable change in investments of $53.2 million, lower operating income of $19.4 million, and losses on foreign exchange of $4.3 million. These items were partially offset by lower net interest expense of $18.4 million, lower net income tax expense of $15.8 million, and lower losses in Other, net, of $15.4 million, which included litigation expense of $16.8 million in the second quarter of 2021.

  • Hughes broadband subscribers totaled approximately 1,346,000, declining 60,000 from March 31, 2022. Our current capacity limitations require a balancing of capacity utilization with subscriber levels in areas of high bandwidth demand. These constraints, and increased competitive pressures, are impacting our consumer subscriber levels. In Latin America, subscriber levels were also impacted by adverse economic conditions, more selective customer screening, and capacity allocation to community WiFi and enterprise opportunities.

  • For the three months ended June 30, 2022, approximately 63% of Hughes segment revenue was attributable to our consumer customers with approximately 37% attributable to our enterprise customers.

  • Cash, cash equivalents and current marketable investment securities were $1.5 billion as of June 30, 2022.

  • During the three months ended June 30, 2022, we purchased 1,924,875 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 six months ended June 30, 2022 and 2021 (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,



2022


2021


2022


2021










Revenue









Hughes


$   491,841


$   492,276


$   985,947


$   968,136

EchoStar Satellite Services


4,850


4,283


9,324


8,372

Corporate and Other


2,625


3,275


5,579


5,908

Total revenue


$   499,316


$   499,834


$ 1,000,850


$   982,416










Adjusted EBITDA









Hughes


$   182,423


$   207,317


$   366,710


$   409,253

EchoStar Satellite Services


3,521


2,243


6,212


4,162

Corporate & Other:









Corporate overhead, operating and other


(18,554)


(20,497)


(39,745)


(41,964)

Equity in earnings (losses) of
unconsolidated affiliates, net


338


(2,369)


440


984

Total Corporate & Other


(18,216)


(22,866)


(39,305)


(40,980)

Total Adjusted EBITDA


$   167,728


$   186,694


$   333,617


$   372,435










Net income (loss)


$     10,473


$     35,015


$     99,418


$   112,587

Expenditures for property and equipment


$     75,779


$     83,232


$   187,917


$   262,466

 

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



For the three months
ended June 30,


For the six months
ended June 30,



2022


2021


2022


2021










Net income (loss)


$     10,473


$     35,015


$     99,418


$   112,587

Interest income, net


(9,072)


(5,240)


(15,494)


(11,189)

Interest expense, net of amounts capitalized


14,307


28,868


29,280


63,535

Income tax provision (benefit), net


5,390


21,152


38,172


43,299

Depreciation and amortization


116,555


118,982


236,991


248,268

Net loss (income) attributable to non-
     controlling interests


3,395


2,280


5,883


3,227

EBITDA


141,048


201,057


394,250


459,727

(Gains) losses on investments, net


22,538


(30,633)


(58,148)


(109,233)

Impairment of long-lived assets


711


15


711


245

Litigation Expense



16,800



16,800

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


(211)


(236)


(444)


(446)

Loss on Debt Repurchase



356



1,938

Foreign currency transaction (gains)
losses, net


3,642


(665)


(2,752)


3,404

Adjusted EBITDA


$   167,728


$   186,694


$   333,617


$   372,435

 

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, 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 June 30, 2022 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Thursday, August 4, 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 CORPORATION

Consolidated Balance Sheets

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




As of



June 30,
2022


December 31,
2021

Assets





Current assets:





Cash and cash equivalents


$           991,595


$           535,894

Marketable investment securities


529,854


1,010,496

Trade accounts receivable and contract assets, net


224,016


182,063

Other current assets, net


211,877


198,444

Total current assets


1,957,342


1,926,897

Non-current assets:





Property and equipment, net


2,312,526


2,338,285

Operating lease right-of-use assets


151,967


149,198

Goodwill


533,505


511,086

Regulatory authorizations, net


464,523


469,766

Other intangible assets, net


17,018


13,984

Other investments, net


352,078


297,747

Other non-current assets, net


329,564


338,241

Total non-current assets


4,161,181


4,118,307

Total assets


$        6,118,523


$        6,045,204






Liabilities and Stockholders' Equity





Current liabilities:





Trade accounts payable


$           103,680


$           109,338

Contract liabilities


134,856


141,343

Accrued expenses and other current liabilities


195,827


209,442

Total current liabilities


434,363


460,123

Non-current liabilities:





Long-term debt, net


1,496,379


1,495,994

Deferred tax liabilities, net


428,600


403,684

Operating lease liabilities


137,446


134,897

Other non-current liabilities


122,179


136,426

Total non-current liabilities


2,184,604


2,171,001

Total liabilities


2,618,967


2,631,124






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, 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,  58,604,747 shares issued and 35,885,079 shares
outstanding at June 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, 800,000,000
shares authorized, 47,687,039 shares issued and outstanding at both
June 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 June 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 June 30, 2022 and
December 31, 2021



Additional paid-in capital


3,355,238


3,345,878

Accumulated other comprehensive income (loss)


(204,465)


(212,102)

Accumulated earnings (losses)


761,767


656,466

Treasury shares, at cost


(514,418)


(436,521)

Total EchoStar Corporation stockholders' equity


3,398,229


3,353,827

Non-controlling interests


101,327


60,253

Total stockholders' equity


3,499,556


3,414,080

Total liabilities and stockholders' equity


$           6,118,523


$           6,045,204

 

 

 

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,



2022


2021

2022


2021









Revenue:








Services and other revenue


$     414,697


$     431,279

$     833,508


$     861,616

Equipment revenue


84,619


68,555

167,342


120,800

Total revenue


499,316


499,834

1,000,850


982,416

Costs and expenses:








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


144,235


139,547

285,364


272,336

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


70,054


54,503

139,168


99,654

Selling, general and administrative expenses


113,091


114,038

231,261


228,157

Research and development expenses


8,764


7,441

16,381


14,986

Depreciation and amortization


116,555


118,982

236,991


248,268

Impairment of long-lived assets


711


15

711


245

Total costs and expenses


453,410


434,526

909,876


863,646

Operating income (loss)


45,906


65,308

90,974


118,770

Other income (expense):








Interest income, net


9,072


5,240

15,494


11,189

Interest expense, net of amounts capitalized


(14,307)


(28,868)

(29,280)


(63,535)

Gains (losses) on investments, net


(22,538)


30,633

58,148


109,233

Equity in earnings (losses) of unconsolidated
affiliates, net


(1,301)


(4,044)

(3,015)


(2,670)

Foreign currency transaction gains (losses), net


(3,642)


665

2,752


(3,404)

Other, net


2,673


(12,767)

2,517


(13,697)

Total other income (expense), net


(30,043)


(9,141)

46,616


37,116

Income (loss) before income taxes


15,863


56,167

137,590


155,886

Income tax benefit (provision), net


(5,390)


(21,152)

(38,172)


(43,299)

Net income (loss)


10,473


35,015

99,418


112,587

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


3,395


2,280

5,883


3,227

Net income (loss) attributable to EchoStar Corporation
common stock


$        13,868


$        37,295

$     105,301


$     115,814









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








Basic


$            0.16


$            0.41

$            1.24


$            1.26

Diluted


$            0.16


$            0.41

$            1.24


$            1.25

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(Amounts in thousands)




For the six months ended June 30,



2022


2021






Cash flows from operating activities:





Net income (loss)


$                99,418


$              112,587

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





Depreciation and amortization


236,991


248,268

Impairment of long-lived assets


711


245

Losses (gains) on investments, net


(58,148)


(109,233)

Equity in losses (earnings) of unconsolidated affiliates, net


3,015


2,670

Foreign currency transaction losses (gains), net


(2,752)


3,404

Deferred tax provision (benefit), net


24,412


34,024

Stock-based compensation


5,047


3,825

Amortization of debt issuance costs


386


2,008

Other, net


27,397


6,198

Changes in assets and liabilities, net:





Trade accounts receivable and contract assets, net


(39,271)


(3,363)

Other current assets, net


(6,113)


(1,120)

Trade accounts payable


1,793


(9,631)

Contract liabilities


(6,487)


23,251

Accrued expenses and other current liabilities


(10,119)


621

Non-current assets and non-current liabilities, net


(24,648)


(5,114)

Net cash provided by (used for) operating activities


251,632


308,640






Cash flows from investing activities:





Purchases of marketable investment securities


(183,529)


(939,255)

Sales and maturities of marketable investment securities


669,600


1,824,332

Expenditures for property and equipment


(187,917)


(262,466)

Expenditures for externally marketed software


(11,967)


(16,835)

India JV formation


(7,892)


Dividend received from unconsolidated affiliate


2,000


Purchase of other investments



(50,000)

Sales of other investments



10,516

Net cash provided by (used for) investing activities


280,295


566,292






Cash flows from financing activities:





Repurchase and maturity of the 2021 Senior Unsecured Notes



(901,818)

Payment of finance lease obligations


(114)


(476)

Payment of in-orbit incentive obligations


(1,908)


(1,431)

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


5,046


4,815

Treasury share repurchase


(77,095)


(163,822)

Contribution by non-controlling interest holder



9,880

Other, net



(966)

Net cash provided by (used for) financing activities


(74,071)


(1,053,818)






Effect of exchange rates on cash and cash equivalents


(728)


(443)

Net increase (decrease) in cash and cash equivalents


457,128


(179,329)

Cash and cash equivalents, including restricted amounts, beginning of
period


536,874


896,812

Cash and cash equivalents, including restricted amounts, end of period


$              994,002


$              717,483

 

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SOURCE EchoStar Corporation

FAQ

What were EchoStar's Q2 2022 earnings results for SATS?

In Q2 2022, EchoStar reported consolidated revenue of $499.3 million and a net income of $10.5 million.

What financial challenges did EchoStar face in the second quarter of 2022?

EchoStar faced a 10.2% decrease in Adjusted EBITDA and a loss of 60,000 subscribers in its Hughes segment.

How did EchoStar perform in the first half of 2022?

For the first half of 2022, EchoStar had a consolidated revenue of $1,000.9 million and a net income of $99.4 million.

What was EchoStar's cash position as of June 30, 2022?

As of June 30, 2022, EchoStar reported a cash position of $1.5 billion.

When will EchoStar discuss its earnings results?

EchoStar will host a conference call on August 4, 2022, at 11:00 a.m. Eastern Time to discuss its earnings.

EchoStar Corporation

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