SATS - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the EchoStar Earnings Conference Call for First Quarter of 2019. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Relations, Vice your may conference. of Dutt, you Investor begin Deepak

Deepak Dutt

good to Chief and today General everybody. for you, of Satellite COO morning, Thank and Services, Kaul, Pradman Welcome and our Dave quarter President Counsel. President XXXX. and EchoStar CFO, Dugan Anders the of Associate our Officer I’m Joe Mike joined Johnson, Torres, by Hughes, CEO, Rayner, Strategy first call earnings of

the in usual, in ask call invite on to listen-only As participants your firms and participate you their a identify we not that mode media or report.

not recording, We allow also you that we respect. do audio which ask

now turn me for to Joe the Safe Let call disclosure. Joe? this Harbor over

Joe Torres

forward-looking Deepak. during results and we or make known historical implied by All other than unknown future this risks, you, forward-looking from uncertainties, statements materially expressed that be statements results actual that facts, our statements and could cause any statements. and involve other Thank from constitute different factors to call, of the historical results

a Report being call forward-looking risks, they Report make and we cautionary the of we XX-K refer understood filed be Form appear. on to any our Quarterly Annual statements For factors Form the please SEC. those during with applicable All wherever XX-Q to should as on and statements list make

statements. on forward-looking consider forward-looking any statements. described should should no to now in reliance for Mike risks any call the over updating undue any You not We carefully our turn report place Dugan. and responsibility the assume I’ll

Mike Dugan

way. Hughes morning, strong had once Good leading welcome We the another Thank our financially everyone, to and you, with call. again quarter Joe.

recently expansion as interested deliver continue We on our also we initiatives plans. that will you be a in announced of number to global exciting

update, it turn then will to overview. and follow me Dave Hughes with talk about let Anders? who provide will ESS, financial Pradman will a now Anders, So over

Anders Johnson

million revenue EBITDA was last compared $XX million QX morning. to $XX adjusted and $XX versus was million last Thanks, year Mike. million year. Good ESS $XX

now Although rates. EchoStar on opportunities, difficult commercial EchoStar market, ultra-secure FSS out environment services several were across we preparing the base. pressure government partnership by a for new data Mobile Equipment distribute their service expanding EchoStar using Mobile and Over look IoT expansion, forward expected will a these and innovative provider progress leveraging our the our the cost are exciting for our EU, includes and for operations MSS satellite its technologies services lower initiative. as due European on products designed substantial excited and XXXX, renew the manufactured which IP-based in be and the existing hybrid turn to CGC and customer partners MSS platforms both services will impact XG terrestrial is we for the global for with The integrated leverage to to European of network solutions, the projects Services to we’re offerings and our between U.S. promote XG satellite a the longer-term network Last about truly that for to new their and services to integrate hybrid networks at rates expect I’m bringing EchoStar will network by I’ll IoT EchoStar Mobile and to of throughout Pradman. into week this that developed to launch rapidly still seeing that be have Mobile hybrid and on a focus Mobile reduce for we S-band continued to also this digital partners team to in interest products IoT authorization. affiliate technologies. transformation terminal this an verticals, Rignet network in time mobile made leader next-generation our XXXX DISH expressed services distribution financial it of distribution that positive in cost And is later optimized build and in services enable new empower over year. technology world-class same and results voice that MSS mobile satellite and and intelligent MXM we a Hughes. grow into development team of new Union. RigNet, dramatically announced agreement developing in networking Limited will for services able and

Pradman Kaul

global more for exist that operate headroom spot growing because sweet And opportunities as the exceed we Morgan Anders. provider. the business in. so world excitement you, largest At at time one long or space a a industry estimates reports, been about growth It’s most And government. of in we much that in global and continue in exists, broadband XX% say Stanley enterprise, report, access. satellite the medium-term trillion sector: that since market and while could COMSYS satellite precisely revenue from service the $X.X Internet and seen short- proud may the in the be we every Thank to we’ve that represents In I’m Satellite significant the rate provider VSAT is recent space consumer, Internet that growth. broadband these projected are Hughes, year the industry. opportunities broadband XXXX, come a to healthy number and much our satellite-based is the

and is we world’s JUPITER well as operators services award leading in networks, the most and around from Europe, world Americas, the those operate Our deployed government Hotspots, networking cellular Wi-Fi satellite system India, powering the as community enterprise backhaul. the winning platforms to

to relation on QX elaborate me XXXX. let in So in our performance these

First, first and over had quarter same EBITDA was XX% I’m the quarter. a adjusted Hughes last report up up pleased strong year. was XX% that Revenue to very

basis over QX margin EBITDA in adjusted Our last XXXX quarter year. same grew a XXX XX%, of the to points increase

me let about talk consumer business. service our Now Internet

subscribers, continue an continued XXX,XXX JUPITER XXXX. ARPU level retail churn over quarter million believe down high and last a continued customer X earnings QX satisfaction. same at X.XXX increase America’s ended on of QX, North XX,XXX in over result many XXXX and We went grow the with up. we despite X We of year and revenue sequentially of the and approximately to beams of QX filling

the an continued launch power for have Central demand XX international satellite in per we provide additional XXXX. Chile, our JUPITER Hughes Ecuador of Telesat footprint bit subscribers Brazil the the date recently America our in and currently cost experience, and service Colombia, and We North payloads, TXXV and satellite South to in With beyond X The most knowledge, and net with Hughes that It Peru, in-service lower construction built levering West expanded we will now to and the we latest service. infrastructure and XXX,XXX Brazil. under over leverage technology is anticipated system the capacity to America. hosted

megabits XXX download user JUPITER of the We X. per expect second with speeds to individual over to provide

Wi-Fi These and bridge backhaul. an by KB exciting also means reach a Brazil, our sell have businesses in Now approach partners with Brazil We Community expand allow include Mexico, X,XXX VSAT-enabled on Wi-Fi deployment retailers to and users to Express at Indonesia. and is partnership launch locations. in Facebook of business. supported Iskra. important are Wi-Fi of the Recent underserved with WiFi Mexico installed markets, broadband large of and of governments end deployed partnership the the and are and unserved and access our a this enterprise an that by broadband Facebook An hotspots over populations allow Russia, strategy very connectivity part Indonesia in community emerging cellular and PSN to initiatives across remote Deployment is to to initiatives digital in of at hotspots data X,XXX community services. VSAT hotspots hotspots to divide community by affordable and terrestrial rural a strategy local platform. Russia throughout partnership hotspots AltergroSky in focusing with or element XX,XXX to Wi-Fi either our Two unserved markets price.

operator is Another JUPITER An Nicaragua. over example exciting backhaul. are to mobile leading that in announcement cellular remote system services power we for VPN of pursuing recent shows communications leading solutions IT is our a our satellite SpeedCast, market a and provider backhaul that and cellular

Maritime was Flight two awarded government large for VSATs program. India’s enable the within X,XXX order from of the basebands government aircrafts JUPITER received up the setting license for subsidiary Indian broadband high-quality Connectivity BharatNet also ships Our and and a the It and territory. services to to Indian Indian

on Another year. system Europe provide XXXX. this foundation exciting development Konnect, next-generation is new-generation, very Africa, system services satellite Konnect satellite for Eutelsat’s JUPITER also its launch in high-throughput which in ground for lays use that for Europe and enable high Eutelsat to to selected the to our satellite expected The throughput is the agreement

services OSS provider gigabits JUPITER market. $XXX of we access at an million Internet of role X, to as with Xplornet Finally, agreement in a approximately continued use over connection valued of Canada on capacity XX Canadian equipment, approximately CPE with the their XX and years for of signed

for with at our This solutions strong Some to of I $X.XX more Eutelsat the X provide our a XX% agreement where both prior earnings the leader over Yahsat this backlog the performance satellites. positions billion, of business far excluding have interest quarter. platform. payloads March subsidiary. share increase at service opportunities using will TXX in a East. will had contribute a continued us market to growing our This exchange than capacity and enhances existing consumer and forward with activity business growing partnership growth. of to further sequential entered in consumer The and XX% satellite. business, month position Ka-band Brazil. the commercial our service the business Yahsat’s in commenced for another thus and local We’ve also our providers current year, venture the for will we’ve West been on services we Africa and in Yah communications Yahsat enterprise looking joint At to Yahsat Brazil And satellite in the look us end Al on our existing in into Brazilian Middle list we of and provide Internet its the Telesat expand combined broadband with partners It all-round as XX in in Brazil. XX success gigabits has contributed XX building our to using strategic to alliances

We NGSO, strengthening reliable efficiencies, while entity. for at joint broadband secure evolving is leading and strong GEO, The terrestrial bring two to an to also Bharti in an combined services strategy satisfy Indian these of and provider, entity throughout of networks. subsidiaries. in launching and solutions. networks ventures providers, the Houston operational most telecom our entered uniquely will Indian our providing India’s the position constantly. market and services partnership our will also of is VSAT continues of will government Bharti for pace way. role solutions business customers into existing provide Satellite Demand India with scale, Airtel, and and solutions with in amazing the Bharti approximately applications continue and leading enterprise the leading a greater service agreement interest acceptance reach connectivity unabated leveraging our ownership new have technology worldwide. contribute XX% its with These hybrid to the combined efficient JUPITER needs in will these world positioned expanding in platform with where play

Let it Dave. over me to now turn

Dave Rayner

Pradman. Thank you,

on to and losses Before this of of to financial partially requires excludes and results, all first utilize offset we efficiency adopted operating earnings it period will EBITDA adjusted to our Adjusted was $XXX changes. compared through made international offset primarily last interest compared and starting ASC in exceptions, in and net quarter Consolidated QX compared in I quarter same year, comments quarter last million be in Accordingly, million was earnings. the Echo to QX of a an XXX, EBITDA by domestic to measured and received performance. in the Free year last $XX adjusted payment like and the change resulted adjusted measurement in payment offset primarily also revenue by and growth mention being suggested you expense. a year, the in represents was a Many million income $XX year, gains million infrastructure. consumer on that a EBITDA going driven release. to EBITDA in compared the $XXX from our equity cash this more I the XXX. Hughes income QX change year. was volatility expenditures changes tax get $XX of measurement first introduced and higher this last an million million increase – release, spending press Echo closely loss received in result those due primarily flow higher my $XXX QX forward. enterprise Hughes lower partially of $XX last Net $XXX by last CPE $XX was on with X% XXX, primarily The ESS. recognized $XXX million, earnings. with million $XXX some as consumer over the to was that enterprise, our year, our defined driven year we primarily higher revenue year quarter which fair was has we that year, the I CapEx that significant in that a was investments with on last Capital present gains minus million value investments, This last would in we satellite million by at by financial million

smaller year. the consumer offset by in adjusted ESS QX an of year, down partially to revenue to Adjusted primarily X costs American revenue. XX% associated business. QX being the lowest this over from from leased in Turning primarily loss quarter, primarily in higher than share was million, $XX in in Corporate was $XX year EBITDA the due an to $XXX last revenues. was and loss in and a last international due Hughes segments. revenue Other to our a million increase sales, growth, quarter rate hardware the in million increase increase of markets. and EchoStar EBITDA compared South year, marketing XX% capacity by $XX revenue was XX% million Despite growth was being driven the margin on EBITDA lower QX FX for and change compared million, year-over-year, of slightly quarter North losses $XX quarter affiliates into satellite in with growth our QX and American revenue last June Hughes’s and last offset QX enterprise $XX the lower primarily last lease consumer $XXX historically Adjusted service was partially million, of segment expansion the primarily QX million last by of from losses. year termination the QX other Hughes the to unconsolidated promotional from the in an year, year, in same revenue reductions

capital bringing notes million to very net in Our that balance $X quarter, million June billion leases. strong quarter the debt of securities the notes inclusive sheet marketable total we be repurchased another repurchased open the with cash In market of $X.X the as continues and mature to the in of two of of $XXX our in year, end and approximately this secured last quarters $XX million. of

is intent this over on out it to me that, these remaining Our let balance cash. at of current back turn With time notes to any outstanding repay Mike.

Mike Dugan

These us initiatives much better in ventures services. satellite Pradman the creative distributing the joint Anders, for mobile the too. Thank with undoubtedly of and Hughes terms led you, the the you, will future. Facebook, again and with To the for growth Dave. Brazil summarize ESS strong Thank Wi-Fi, we RigNet in India, way initiated like community and IP-based earnings quarter, and once agreement partnership solutions position

session. now We ready question-and-answer are for the

So me the turn back over let operator. it to

Operator

in Thank Ric question James. have you. [Operator go ahead. we the a Please line the queue Prentiss with of Instructions] And Raymond from already

Ric Prentiss

Thanks. Good morning, guys.

Mike Dugan

Ric. morning, Good

Ric Prentiss

Hey. A couple questions.

American glad or subs in had guys some Latin color there? America. be a many business Hughes total have ago, to nice First, those can a the you you split Latin Can looks providing just – about so quarter you how to subscribers ramping the between give might ago us gage we see and year

Mike Dugan

of growth South is we say reality We America. coming have America. majority that North But than now. QX have the had was growth Ric, we we what I out in in had net less the will of the

background a lot got You’ve on. going of noise

Ric Prentiss

sorry. I’m Yes,

Mike Dugan

Nice the growth America, offset with but in North with by got wholesale those DISH largely subs continued arrangement off. we’ve churning

Ric Prentiss

some other entities? Also really EBITDA the investments. losses sense. through since you think and still about modeling should out unconsolidated gains minority guys with think help you’re over to makes You’ve That the where change, and is all unconsolidated Yahsat the us done made line? place with it interest you Bharti bounce consolidating. in glad now How EBITDA? Can It side more in taking on we the and seems that

Mike Dugan

understand tough. – have control. we don’t Obviously that’s subsidiaries, influence are we but over those Yes, have I those

to a We bit them historically time don’t it adjustments in tends when – Others statements, of subsidiaries. in the their incorporate Some QX to just of into to the year-end little seasonal tend be we results. results. timing of get year-end financial our from some get get given we

certainly So JV that early it’s got time. losses report. stage we’ve QX, to given a to generate operation, it’s starting some those quarter, for sometime frankly, Africa going this surprises from retail And we of the And subsidiaries. now get an starting period

some our expect time. Obviously, we to to So hugely over that’s financial successful item on line going negative to have be that statements. impact that

Ric Prentiss

Right.

I at kind or $X of maybe for the it way. different that new on investment minority Wireless? then and noticed looks me, the Last think a expanded we’re Hughes million like going Was looking we one treat to stay for Tarana interest maybe interest. these and ESS non-controlling into

Mike Dugan

what I Indian we specifically No. our you’re believe interest, subsidiaries. about in some talking is minority repurchased

Ric Prentiss

Okay. Thanks.

Operator

have ahead. [Operator line we Instructions] question Please go the And [indiscernible]. from of a

Unidentified Analyst

substantial Hey, $XX million. the on A investment. was thought Thanks followup Tarana for subs. heard Ric’s I I to the on Wireless, guys. I a international believe it question on it much color more was

what see an broadband one? executives I’m run technology that the of bit? wireless slice DISH’s again then of is overall your that wondering market? that markets, in market go And to you using expand care and issues. and You have your this understanding to the takes And play the between of non-line-of-sight little U.S. Could other technology that of to a you spectrum is one number on for more expand fixed secondly, board. Charlie you feedback. going and kind company senior Thanks is, of suburban guys on your could of for a is broadband my the synergies expansion addressable potentially signaling It’s

Mike Dugan

on and comment to – did and their think senior help to it’s and a going advantage great continue them broadband It’s at of other the so Pradman we’re satellite. infrastructure, exciting start-up. First got most forth but and to way take some of number, one all, leader than guys all it. technology to our got their on all not of his We Tarana has of the so lend to We through potential. look They’ve other areas engineering, some ideas.

So that’s the why it initial made Tarana. on, with challenges get And trials successful out and are we’re with in some a the lot will to help of us sense so for sure that equipment of around world the there. us that if involved they’re

about about it. I’m that’s to going say So all

Unidentified Analyst

Thank you.

Operator

[Operator And queue. no like further it Instructions] looks in there questions the are

Deepak Dutt

call. This Since questions. to Okay. the no are brings there the of us end

So who participated thank you good everybody and day.

Operator

concludes call. conference This today’s

now You may disconnect.

EchoStar (SATS) 8 May 192019 Q1 Earnings call transcript