EchoStar Corporation reports 3.5% EBITDA decline in 2020 and almost no change in Revenue of 1,888
02/23/2021 • About EchoStar Corporation (
$SATS) • By InTwits
EchoStar Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 35.0% in 2020 vs. 36.4% in 2019 vs. 40.3% in 2016
- EchoStar Corporation has high CAPEX intensity: 5 year average CAPEX/Revenue was 28.2%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $44m in 2020, $54m in 2019, $153m in 2018, $78m in 2017, $53m in 2016
- The company has potentially unprofitable business model: ROIC is 1.9%
- It operates with high leverage: Net Debt/EBITDA is 2.5x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
EchoStar Corporation's Revenue showed almost no change in 2020. Revenue growth showed slowdown in 20Q4 - it was -2.0% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 36.4% to 35.0% in 2020. EBITDA Margin followed a declining trend at -1.2 pp per annum in the last 5 years.
Gross Margin increased on 2.3 pp from 58.3% to 60.6% in 2020. SG&A as a % of Revenue decreased slightly on 1.8 pp from 27.0% to 25.2% in 2020. SG&A as a % of Revenue grew at 2.2 pp per annum in the last 5 years.
Net Income margin increased slightly on 1.2 pp from -3.3% to -2.1% in 2020.
Investments (CAPEX, working capital and M&A)
EchoStar Corporation's CAPEX/Revenue was 21.7% in 2020. The company's CAPEX/Revenue decreased on 9.3 pp from 30.9% in 2017 to 21.7% in 2020. It's average CAPEX/Revenue for the last three years was 23.5%. EchoStar Corporation maintained rich investment policy and has spent a big chunk of EBITDA (61.8%) to CAPEX. CAPEX as a % of Revenue stuck to a declining trend at -4.5 pp per annum in the last 5 years.
Return on investment
The company operates at low but positive ROIC (1.9%) and negative ROE (-1.1%). ROIC increased slightly on 0.77 pp from 1.2% to 1.9% in 2020. ROE showed almost no change in 2020. During 2016-2020 ROIC bottomed in 2019 at 1.2%.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 3.8x. Net Debt / EBITDA surged on 1.0x from 1.4x to 2.5x in 2020. Debt increased slightly on 0.85% while cash dropped on 41.0%.
EchoStar Corporation has short term refinancing risk: cash is only 98.1% of short term debt.
Management team
Michael T Dugan is a EchoStar Corporation's CEO. Michael T Dugan has spent 11 years with the company. EchoStar Corporation's CFO is David J Rayner "Dave". David J Rayner "Dave" has 9 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
EchoStar Corporation ($SATS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,810 | 1,886 | 2,091 | 1,886 | 1,888 | 0.1% |
| Gross Profit | 1,085 | 1,127 | 1,310 | 1,099 | 1,144 | 4.1% |
| SG&A | 325 | 366 | 436 | 509 | 475 | -6.7% |
| EBITDA | 729 | 718 | 781 | 686 | 661 | -3.5% |
| EBIT | 296 | 196 | 183 | | | |
| Interest expence | 123 | 217 | 249 | | | |
| Tax | 80 | -284 | 31 | | | |
| Net Income | 180 | 393 | -40 | -63 | -40 | |
| Stock Based Compensation | 15 | 10 | 10 | | | |
Balance Sheet
|
|---|
| Cash | 2,570 | 2,431 | 928 | 1,519 | 896 | -41.0% |
| Accounts Receivable | 202 | 240 | 215 | | | |
| Inventory | 63 | 84 | 75 | | | |
| Accounts Payable | 171 | 113 | 123 | | | |
| Short Term Debt | 33 | 41 | 960 | 15 | 913 | 5,931.2% |
| Long Term Debt | 3,622 | 3,594 | 2,573 | 2,487 | 1,610 | -35.2% |
Cash flow
|
|---|
| Capex | 722 | 583 | 555 | 419 | 409 | -2.3% |
Ratios
|
|---|
| Revenue growth | -2.1% | 4.1% | 10.9% | -9.8% | 0.1% | |
| EBITDA growth | -0.8% | -1.4% | 8.8% | -12.3% | -3.5% | |
|
|---|
| Gross Margin | 59.9% | 59.8% | 62.7% | 58.3% | 60.6% | 2.3% |
| EBITDA Margin | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% | -1.3% |
| EBIT Margin | 16.4% | 10.4% | 8.8% | | |
| SG&A, % of revenue | 18.0% | 19.4% | 20.9% | 27.0% | 25.2% | -1.8% |
| SBC, % of revenue | 0.8% | 0.5% | 0.5% | | |
| Net Income Margin | 9.9% | 20.8% | -1.9% | -3.3% | -2.1% | 1.2% |
| CAPEX, % of revenue | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% | -0.5% |
|
|---|
| ROIC | 4.3% | 2.5% | 2.4% | 1.2% | 1.9% | 0.8% |
| ROE | 4.9% | 9.9% | -1.0% | -1.6% | -1.1% | 0.5% |
| Net Debt/EBITDA | 1.5x | 1.7x | 3.3x | 1.4x | 2.5x | 1.0x |
| Interest coverage ratio (ICR) | 2.4x | 0.9x | 0.7x | | |
| Interest expence / Average debt | 3.4% | 6.0% | 6.9% | | | |
People
|
|---|
| Insider ownership | 4.7% | 4.7% | 4.7% | | | |
| Employees | 4,000 | 2,100 | 2,200 | | | |
| Revenue/Employee, th. $ | 453 | 898 | 951 | | | |
EchoStar Corporation ($SATS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 466 | 459 | 474 | 489 | | 2.5% | -0.2% | 0.3% | -2.0% |
| EBITDA | 143 | 165 | 167 | 191 | | -21.6% | 9.2% | -8.1% | 20.5% |
| Net Income | -54 | -11 | 25 | 0 | | -482.3% | - | - | - |
Balance Sheet
|
|---|
| Cash | 1,599 | 1,948 | 556 | 896 | | 18.5% | 50.1% | -64.1% | -41.0% |
| Short Term Debt | 14 | 911 | 912 | 913 | | -98.6% | 1,447.1% | 5,670.6% | 5,931.2% |
| Long Term Debt | 2,496 | 1,606 | 1,610 | 1,610 | | -6.1% | -39.4% | -35.1% | -35.2% |
Ratios
|
|---|
| Gross Margin | 58.9% | 62.2% | 61.2% | 59.9% | | 0.4% | 3.3% | 2.5% | 3.0% |
| EBITDA Margin | 30.7% | 35.8% | 35.2% | 39.1% | | -9.4% | 3.1% | -3.2% | 7.3% |
| Net Income Margin | -11.7% | -2.5% | 5.4% | 0.0% | | -14.8% | -1.2% | 9.2% | 10.7% |
Peers in Communications Equipment
Below you can find EchoStar Corporation benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 2.8% | 3.7% | 4.4% |
|---|
| EchoStar Corporation ($SATS) | - | 4.1% | 10.9% | -9.8% | 0.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| EchoStar Corporation ($SATS) | 59.9% | 59.8% | 62.7% | 58.3% | 60.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| AudioCodes Ltd. ($AUDC) | 8.0% | 8.1% | 10.8% | 0.3% | 18.4% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| PC-Tel, Inc. ($PCTI) | 2.0% | 2.9% | 3.3% | 2.5% | 5.3% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 2.3% |
|---|
| EchoStar Corporation ($SATS) | 4.3% | 2.5% | 2.4% | 1.2% | 1.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | -0.3x | -0.4x | -0.5x |
|---|
| EchoStar Corporation ($SATS) | 1.5x | 1.7x | 3.3x | 1.4x | 2.5x |
