EchoStar Corporation (Nasd 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 $1.4 million year over year, primarily due to higher revenue.
- Corporate and Other Adjusted EBITDA remained relatively flat year over year.
- Hughes broadband subscribers totaled approximately 1,063,000, declining 165,000 from December 31, 2022. In the U.S., our current capacity limitations, increasing bandwidth usage by our existing subscribers, and competitive pressures are impacting our consumer subscriber levels. In Latin America, subscriber levels were tempered by our focus on more profitable consumer subscribers and by our allocation of capacity to enterprise opportunities.
- For the three months ended September 30, 2023, approximately 37% of Hughes segment revenue was attributable to our enterprise customers, decreasing from 40% in the same period last year. Despite this drop in revenue, we remain committed to growing our Enterprise market. Just recently, we announced a major deal with Delta Air Lines that will increase our backlog in the fourth quarter and diversify our business.
- The JUPITER 3/EchoStar XXIV satellite launched successfully on July 28, 2023. Currently, the satellite is in the final stages of in-orbit testing. Service launch is on schedule for December which will instantly bring over 500 Gbps of capacity over North and South America.
Set forth below is a table highlighting certain of EchoStar’s segment results for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands) (all US GAAP amounts reference results from operations):
|For the three months|
ended September 30,
|For the nine months|
ended September 30,
|Hughes||$ 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||$1,498,237|
|Total Revenue||$ 453,109||$ 499,316||$ 892,706||$1,000,850|
|Net income (loss)>||$ 532||$ 19,550||$ 37,437||$118,968|
|Hughes||$ 143,730||$ 177,574||$ 469,007||$ 544,284|
|EchoStar Satellite Services||4,867||3,447||14,085||9,658|
|Corporate & Other:||(22,788)||(22,788)||(69,042)||(61,506)|
|Total Adjusted EBITDA||$ 125,809||$ 158,819||$ 414,050||$ 492,436|
Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):
|For the three months|
ended September 30,
|For the nine months|
ended September 30,
|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 noncontrolling 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||—–|
|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.