EchoStar Posts Lower Income in 1Q and 1H of 2019

Englewood, Colo., Aug. 8, 2019 -- Shares of EchoStar Corp. declined 7.3% following the company’s 2Q19 earnings release, reflecting disappointment with the company’s subpar EBITDA performance and one-time charges. Following the decline, shares of EchoStar  are now trading at 4.9x the consensus 2020 EBITDA forecast, which represents a discount to both the stock’s long-term average and its closes peer group competitor Viasat.

In August 8, EchoStar released its three months ended June 30, 2019 financial highlights with consolidated revenues of US$ 537 million, consolidated net loss of US$ 5 million, consolidated net loss attributable to EchoStar common stock of US$ 6 million, and diluted loss per share of $0.06. In first quarer of 2018, the company posted a net income of US $77.68 million.

For six months ended June 30, 2019, EchoStar posted consolidated revenues of $1,068 million, consolidated net income of $10 million, consolidated net income attributable to EchoStar common stock of $9 million, and diluted earnings per share of $0.09. During the same period in 2018, the company netted US$56.5 million.

EchoStar also reported approximately 1,415,000 total Hughes broadband subscribers as of June 30, 2019, including approximately 169,000 subscribers in Central and South America. Its cash, cash equivalents and current marketable investment securities was $2.5 billion as of June 30, 2019.

Quilty Analytics said despite the gloomy reaction, EchoStar continues to pile up business wins (JVs, partnerships, infrastructure deals) that should eventually drive sustainable long-term growth.  

"The pending ESS asset sale to DISH should enable EchoStar to present a cleaner growth story, but barring signs of investor love, EchoStar is well-positioned (cash-on-hand of $2.5 billion) to take matters into its own hands ($500 repurchase authorization)," said Quilty.

Quilty noted that EchoStar service revenu was up 5% and equipment was up 15% after its recent JUPITER deals. Its EBITDA was also negatively impacted by litigation expenses of $25 million, bad debt of $13 million, sales & promotion activities of $10 million, and strategic investments  of $5 million.

EchoStar's Hughes revenus rose 6%, consumer was up 11%, but enterprise down 15%. Hughes Adjusted EBITDA also rose 12.5%.
And Hughes added 26,000 subscribers, split evenly between N. America and international. The company's international subscribers now number 169,000.

EchoStar announced three new JUPITER infrastructure deals during the quarter. It is also in discussion with multiple aero service providers for IFC services in India.

Quilty said it was lowering its 2019/2020 Adjusted EBITDA estimates by ~3% and ~6%, respectively, to reflect steeper up-front investment costs associated with new business wins.