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 | For the six months | |||||||
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 | $ 49,016 | $ 75,779 | $ 93,087 | $ 187,917 | ||||
Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):
For the three months | For the six months | |||||||
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 | — | — | ||
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 | 59 | 59 | ||
Class B convertible common stock, $0.001 par value, 800,000,000 | 48 | 48 | ||
Class C convertible common stock, $0.001 par value, 800,000,000 | — | — | ||
Class D common stock, $0.001 par value, 800,000,000 shares | — | — | ||
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 | For the six months | |||||||
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 | ||||
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