Hughes
Communications
Announces
First
Quarter
2010
Results
May
5
2010
Hughes
Communications,
Inc.
announced
financial
results
for
the
first
quarter
ended
March
31,
2010.
Hughes'
consolidated
operations
are
classified
into
five
reportable
segments:
North
America
Broadband,
International
Broadband,
Telecom
Systems,
HTS
Satellite,
and
Corporate
and
Other.
The
North
America
Broadband,
International
Broadband,
Telecom
Systems,
and
HTS
Satellite
segments
represent
all
the
operations
of
Hughes
Network
Systems,
LLC
("HNS"),
Hughes'
principal
operating
subsidiary.
First
Quarter
2010
Financial
Highlights:
- Record Adjusted EBITDA of $43 million, an increase of 30% over the first quarter of 2009.
- Consumer business continues impressive growth:
- Total revenue increased by 15% and services revenue by 22% over the first quarter of 2009.
- Record first quarter subscriber gross adds of 57,000.
- Record first quarter net adds of 27,000 for a growth of 19% over the first quarter of 2009.
- Consumer ARPU increased to $72 from $68 for the first quarter of 2009.
- Churn improved to 1.98% from 2.29% for the first quarter of 2009, the first time that churn has gone below 2%.
- Consolidated total revenues of $243 million, a 1% increase over the first quarter of 2009, or a 4% increase excluding revenues from the Telematics group.
- Consolidated services revenues of $188 million, a 16% increase over the first quarter of 2009, or a 21% increase excluding revenues from the Telematics group.
- Operating income of $10.6 million, an increase of 26% over the first quarter of 2009.
- New orders of $238 million, an increase of 10% over the first quarter of 2009, with major orders from Lowes, T.J. Maxx, Conoco Phillips, GTECH, and Denny's in our North America broadband business; Avanti, Telefonica, Bentley Walker, SREI Sahaj, Shanghai Sitico, and a leading Brazilian cellular operator in our International broadband business; and Globalstar and a major utility in our Telecom Systems business. Strong non-consumer order backlog of $812 million as of March 31, 2010.
- Positive net cash from operating activities of $13 million, with cash and marketable securities of $253 million as of March 31, 2010.
Set
forth
below
are
tables
highlighting
certain
of
Hughes'
and
HNS'
results
for
the
three
months
ended
March
31,
2010
and
2009.
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Hughes Communications, Inc.
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Hughes Network Systems, LLC
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Three Months
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Three Months
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Ended March 31,
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Ended March 31,
|
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(Dollars in thousands)
|
2010
|
|
2009
|
|
(Dollars in thousands)
|
2010
|
|
2009
|
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|
Revenue
|
|
|
|
|
Revenue
|
|
|
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North America Broadband
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$ 173,995
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$ 165,608
|
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North America Broadband
|
$ 173,995
|
|
$ 165,608
|
|
|
International Broadband
|
43,456
|
|
44,884
|
|
International Broadband
|
43,456
|
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44,884
|
|
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Telecom Systems
|
24,692
|
|
29,262
|
|
Telecom Systems
|
24,692
|
|
29,262
|
|
|
HTS Satellite
|
-
|
|
-
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|
HTS Satellite
|
-
|
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-
|
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Corporate and Other
|
1,050
|
|
461
|
|
Total
|
$ 242,143
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$ 239,754
|
|
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Total
|
$ 243,193
|
|
$ 240,215
|
|
|
|
|
|
|
|
|
|
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Operating income (loss)
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Operating income (loss)
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North America Broadband
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$ 9,616
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$ 1,750
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North America Broadband
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$ 9 ,616
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$ 1,750
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International Broadband
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(1,156)
|
|
1,231
|
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International Broadband
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(1,156)
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|
1,231
|
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Telecom Systems
|
3,708
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5,489
|
|
Telecom Systems
|
3,708
|
|
5,489
|
|
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HTS Satellite
|
(858)
|
|
-
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HTS Satellite
|
(858)
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-
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Corporate and Other
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(746)
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(107)
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Total
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$ 11,310
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$ 8,470
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Total
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$ 10,564
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$ 8 ,363
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Net Loss
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$ (6,140)
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$ (4,696)
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Net Loss
|
$ (5,562)
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$ ( 4,854)
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|
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Adjusted EBITDA*
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$ 42,602
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$ 32,729
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Adjusted EBITDA*
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$ 43,008
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$ 32,465
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New Orders
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$ 238,387
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$ 217,482
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New Orders
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$ 237,117
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$ 217,021
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* For the definition of Adjusted EBITDA, see "Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures" below.
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Recent
Highlights:
- HNS awarded a contract to Arianespace for the launch of HNS' Jupiter™ satellite in the first half of 2012. The Ariane 5 heavy launcher will launch the Jupiter satellite into geosynchronous transfer orbit from Europe's Spaceport in Kourou, French Guiana. Jupiter is HNS' next-generation, Ka-band, 100+ Gbps satellite system with 100 times the capacity of conventional Ku-band satellites. Coface, the French Export Credit Agency, has issued a commitment letter to provide financing for up to 85% of the launch contract value.
- Hughes do Brazil, HNS' Brazilian subsidiary, signed a $20 million, 5-year contract with a leading cellular operator in Brazil to provide backhaul services for their cellular network. This order builds on the initial contract of $12 million signed with the same customer in March 2009.
- Hughes Network Systems Ltd., HNS' European subsidiary, signed an $18 million, multi-year agreement to supply Avanti Communications Group, plc with advanced Ka-band networking infrastructure for Avanti's HYLAS 2 satellite, building on the initial $24 million contract to supply Ka-band technology for HYLAS 1 signed last October. Both agreements include acquisition of satellite capacity by Hughes, which will be used to expand its Ka-band broadband services across Europe, the Middle East, and Africa.
- IPNet, one of Russia's leading satellite service providers, purchased advanced Hughes HX and HN broadband satellite terminals, bringing its total network to over 2400 sites serving oil and gas companies, retail chains, and small to medium enterprises.
- HNS was awarded a contract by the Virginia Information Technologies Agency (VITA), enabling Hughes to provide satellite broadband technology to public sector entities throughout the Commonwealth of Virginia.
- HNS announced an agreement with Vizada, the leading independent global distribution partner of Inmarsat's Broadband Global Network (BGAN) service. The agreement expands Hughes Europe's portfolio of Managed Network Services for major European enterprises to include delivery of broadband 'mobile office' applications worldwide.
- HNS' advanced 9350 BGAN mobile satellite terminals are now being delivered to JSAT Mobile Communications of Japan who, in turn, is providing them for the National Police Agency of Japan. The terminals are being used for communications-on-the-move to broadcast real-time videos of emergency situations and natural disasters to police headquarters.
- HNS entered into an amended and restated $50 million senior secured revolving credit facility with J.P. Morgan Chase and Barclays Capital whereby, among other changes, the maturity date was extended to March 16, 2014.
To
summarize,
Pradman
Kaul,
president
and
CEO
said,
"Our
consumer
business
continued
to
lead
the
way
in
the
first
quarter
of
2010
with
record
gross
adds
combined
with
lower
churn
and
increased
ARPU,
all
of
which
resulted
in
strong
services
revenue
growth.
Services
revenue
from
the
enterprise
segments
also
continued
to
show
strong
growth.
We
were
awarded
impressive
orders
from
our
international
enterprise
customers
and
our
non-consumer
backlog
looks
solid
going
into
the
second
quarter.
Development
work
on
our
Jupiter
satellite
is
on
track,
we
signed
the
launch
contract
with
Arianespace,
and
we
continue
to
assess
interesting
strategic
initiatives.
We
are
very
pleased
with
our
accomplishments
and
are
positioned
well
for
the
rest
of
2010
and
beyond."
Commenting
on
Hughes'
financial
performance,
Grant
Barber,
executive
vice
president
and
CFO
said,
"The
strategy
of
expanding
margins
through
the
satellite
ownership
model
is
playing
out
very
well,
as
evidenced
by
the
strong
growth
in
our
operating
profits
and
Adjusted
EBITDA
in
the
first
quarter
of
2010.
Our
liquidity
position
remains
strong
with
cash
and
marketable
securities
of
$253
million
as
of
March
31,
2010."
Reconciliation
of
Non-GAAP
Financial
Measures
to
GAAP
Financial
Measures
The
following
table
reconciles
the
differences
between
Hughes'
Net
Income
(Loss)
as
determined
under
United
States
of
America
Generally
Accepted
Accounting
Principles
(GAAP)
and
Adjusted
EBITDA.
Hughes Communications, Inc.
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|
|
Three Months
|
|
|
Ended March 31,
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|
(Dollars in thousands)
|
2010
|
|
2009
|
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Net Loss
|
$ (6,140)
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|
$ (4,696)
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|
Add:
|
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Equity incentive plan compensation
|
1,871
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1,783
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Interest expense
|
16,110
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13,836
|
|
Income tax expense (benefit)
|
1,219
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(655)
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Depreciation and amortization
|
30,133
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21,893
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Long-term incentive/retention cash plan
|
-
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888
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Less:
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Interest income
|
(591)
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(320)
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Adjusted EBITDA
|
$ 42,602
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$ 32,729
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The
following
table
reconciles
the
differences
between
HNS'
Net
Income
(Loss)
as
determined
under
GAAP
and
Adjusted
EBITDA.
Hughes Network Systems, LLC
|
|
|
Three Months
|
|
|
Ended March 31,
|
|
(Dollars in thousands)
|
2010
|
|
2009
|
|
Net Loss
|
$ (5,562)
|
|
$ (4,854)
|
|
Add:
|
|
|
|
|
Equity incentive plan compensation
|
1,832
|
|
1,637
|
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Interest expense
|
16,105
|
|
13,829
|
|
Income tax expense (benefit)
|
1,217
|
|
668)
|
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Depreciation and amortization
|
29,969
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|
21,860
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|
Long-term incentive/retention cash plan
|
-
|
|
888
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Less:
|
|
|
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Interest income
|
(553)
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(227)
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Adjusted EBITDA
|
$ 43,008
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$ 32,465
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The
condensed
consolidated
financial
statements
of
Hughes
and
HNS
for
the
periods
ended
March
31,
2010
and
2009
are
attached
to
this
press
release.
talk Satellite welcomes comment -
comment@talksatellite.com
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