Echostar's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Echostar Corporation ( SATS)

Q4 2011 Earnings Call

February 23, 2012 11:00 AM ET

Executives

Deepak Dutt – VP, IR

Dean Manson – General Counsel

Michael Dugan – President and CEO

Ken Carroll – CFO

Pradman Kaul – President and CEO, Hughes Communications, Inc.

Analysts

Anthony Klarman – Deutsche Bank

Andrew – Macquaire Capital

Chris Little – Longfellow

Josh Rosen – Act II

Adam Spielman – PPM America

Michael McCaffrey – Shenkman Capital

Presentation

Operator

Good morning. My name is Sarah, and I will be the conference operator today. At this time, I’d like to welcome everyone to the EchoStar Corporation Q4 2011 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I’d now like to turn the call over to our host, Mr. Deepak Dutt, Vice President of Investor Relations. You may begin your conference.

Deepak Dutt

Thank you, operator, and good day, everybody. Welcome to EchoStar’s fourth quarter 2011 earnings call.

I’m joined today by Mike Dugan, our CEO; Ken Carroll, CFO; Pradman Kaul, President of Hughes; Andrew Johnson, President of EchoStar Satellite Services; Roger Lynch, Executive Vice President of EchoStar Advanced Technologies; Grant Barber, CFO, Hughes; Dean Manson, General Counsel; and Paul Orban, Controller.

As you know, we invite media to participate in listen-only mode on the call and ask that you not identify participants or their phones in your reports. We also do not allow audio taping, which we ask that you respect.

Let me now turn this over to Dean Manson for the Safe Harbor disclosure. Dean?

Dean Manson

Thank you, Deepak, and hello, everyone.

All statements we make during this call that are not statements of historical fact constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by such forward-looking statements.

For a list of those factors and risks, please refer to our Annual Report on Form 10-K to be filed in connection with our earnings. All cautionary statements that we make during this call should be understood as being applicable to any forward-looking statements we make, wherever they appear.

You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements.

With that said, let me turn it back to Deepak.

Deepak Dutt

Thank you, Dean. We will start the call now with comments by Mike Dugan. Mike?

Michael Dugan

Thank you, Deepak, and welcome, everybody, to today’s call. This morning, we released certain preliminary unaudited results for the fourth quarter and year ended December 31, 2011. We plan on filing our 10-K early next week. I’d like to take a moment and recap the highlights of those results for you.

EchoStar Corporation today reported total revenue of $834 million for the first quarter ended December 31st, a 62.6% increase compared with $513 million for the fourth quarter ended December 31, 2010. The loss before income taxes totaled $22 million for the quarter ending December 31, 2011 compared with income before income tax of $186 million during the corresponding period in 2010.

For the year ended December 31, 2011, EchoStar reported total revenue of $2.76 billion compared with $2.35 billion for the year ended December 31, 2010, an increase of 17.5%. Income before income taxes for the year ended December 31, 2011 totaled $26 million compared with $289 million for the year ended December 31, 2010. Again, we are in the process of completing the full financial statements and the audit and expect to file a 10-K early next week.

So let’s move on to specific highlights, before we open up to questions and answers. First of all, JUPITER, now known as EchoStar 17, our Ka-band satellite under construction (inaudible) now has successfully completed the alignment and dynamic phase, while spacecraft is built up with all of its light hardware and tested to confirm that it can withstand the launch load (inaudible).

The program now is in the final testing phase. JUPITER’S Gateway system and user terminals have successfully completed their factory and field qualifications and are now being tested over the EchoStar-leased AMC 15 Ka-band satellite.

Processing – crossing these major milestones pave the way for the planned launch in the summer of 2012 of EchoStar 17, which will deliver high speed HughesNet Gen4 broadband satellite Internet service across North America and provide the capacity to satellite growth in our consumer business. The EchoStar 16 spacecraft which is a DBS satellite fully leased to DISH Network is under construction, also at Space Systems/Loral and has successfully completed thermal vacuum testing. The program is now entering the alignment dynamic phase and it is on track for completion in the summer of 2012 and will launch sometime in the second half of 2012 on board the Proton.

You may recall that at the Q3 earnings call we announced the word of certain orbital slots to our Bulgarian subsidiary. We have since been in discussion with Anatel, the Brazilian telecom regulatory agency and are optimistic that the license for the 45 degree west slot will be signed shortly. As a result we are looking forward to expanding our business in one of the fastest-growing regions of the world.

Used/new order input continued a strong pace in Q4, significant orders in our North American enterprise business included (inaudible) 44, GTECH, Best Western, Halliburton, Yum, Jack-in-the-Box McDonald’s, Sherman Williams, Konica, Phillips and various orders from the (inaudible) intelligence agencies.

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