EchoStar Announces Financial Results for the Three and Nine Months Ended September 30, 2023
November 6, 2023

EchoStar Announces Financial Results for the Three and Nine Months Ended September 30, 2023

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

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