PR Newswire | Aug 3, 2021 06:01AM EDT

30, 2021

08/03 05:00 CDT

EchoStar Announces Financial Results for the Three and Six Months Ended June 30, 2021 ENGLEWOOD, Colo., Aug. 3, 2021

ENGLEWOOD, Colo., Aug. 3, 2021 /PRNewswire/ -- 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.

ECHOSTAR CORPORATION Consolidated Balance Sheets (Amounts in thousands, except share and per share amounts)



As of

June 30, 2021December 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, net186,945 183,989

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 at58 57 June 30, 2021 and 57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 2020

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 48 48 shares issued and outstanding at both June 30, 2021 and December 31, 2020

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 2,670 3,732 affiliates, net

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, (3,363) (5,262) net

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, (5,114) 5,729 net

Net cash provided by (used for) operating 308,640 245,280 activities



Cash flows from investing activities:

Purchases of marketable investment securities (939,255) (555,367)

Sales and maturities of marketable investment 1,824,332 977,532 securities

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 566,292 200,524 activities



Cash flows from financing activities:

Repurchase and maturity of the 2021 Senior (901,818) - Unsecured Notes

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 - 436 exercised

Net proceeds from Class A common stock issued 4,815 5,300 under the Employee Stock Purchase Plan

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 (1,053,818)9,075 activities



Effect of exchange rates on cash and cash (443) (19,232) equivalents

Net increase (decrease) in cash and cash (179,329) 435,647 equivalents

Cash and cash equivalents, including restricted 896,812 1,521,889 amounts, beginning of period

Cash and cash equivalents, including restricted $717,483 $1,957,536amounts, end of period

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SOURCE EchoStar Corporation