EchoStar's CEO Discusses Q1 2012 Results - Earnings Call Transcript

EchoStar Corporation (SATS)

Q1 2012 Earnings Call

May 7, 2012 1:30 pm ET

Executives

Deepak Dutt – Vice President, Investor Relations

Dean A. Manson – Executive Vice President, General Counsel and Secretary

Michael T. Dugan – President, Chief Executive Officer and Director

Kenneth G. Carroll – Executive Vice President and Chief Financial Officer

Pradman P. Kaul – President and Chief Executive Officer, Hughes Communications, Inc.

Mark W. Jackson, President, EchoStar Technologies L.L.C.

Analysts

Christopher K. Leung – Citigroup Global Markets Ltd.

Amy Yong – Macquarie Capital, Inc.

Kenneth Miller – Nokomis Capital LLC

Wayne Walden – Thornburg Investment Management, Inc.

Barry Kaplan – Maple Tree Capital Management LLC

Josh Rosen – Act II. Capital

Presentation

Operator

Good afternoon, ladies and gentlemen. My name is Martina, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the EchoStar Corporation First Quarter 2012 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 Deepak Dutt, Vice President, Investor Relations. You may begin your conference.

Deepak Dutt

Thank you, operator, and good day, everyone. Welcome to EchoStar’s first quarter 2012 earnings call.

I’m joined today by Mike Dugan, our CEO; Ken Carroll, CFO; Pradman Kaul, President of Hughes; Mark Jackson, President of EchoStar Technologies; Roger Lynch, Executive Vice President, Advanced Technologies; Grant Barber, CFO, Hughes; Dean Manson, Executive Vice President and General Counsel and Secretary; and Tom McElroy, Controller at Hughes.

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 A. 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. All cautionary statements that we make during this call should be understood as being applicable to any forward-looking statements we make, wherever they may 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.

Let me now turn it back to Deepak.

Deepak Dutt

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

Michael T. Dugan

Thanks, Deepak, and welcome everybody to today’s call. We’re pleased to have delivered a solid quarter and I’d like to highlight some important events from the quarter. First a few financial highlights. First quarter 2012 revenue was $765 million compared to $480 million in the first quarter of 2010.

Service revenue more than doubled $370 million and now represents $48% of our total revenue, which is consistent with our strategy of increasing the service content of our revenue. From a liquidity perspective, we ended the quarter in good financial shape with $1.7 billion in cash and marketable securities.

Now for a few recent highlights, we successfully launched the Hopper and Joey product line, with DISH network on which perhaps in public reviews have been very overwhelmingly positive. Our delivery plan has been on track to expectations. The hard drive supply problems due to flooding in Thailand has been well mitigated by our supply chain organization, which allowed us to meet the customer requirements.

We launched the new hard drive based STB for Bell TV, and will soon launch a new HD DVR set-top box offering for Bell TV. There again our team did a great job of mitigating supply issues with hard drives into the Bell TV film.

Dish Mexico subscriber count remains on plan approaching 2.1 million customers. HD TV growth is on the progress and continues to be focused on the high tier customer base. Several new tablet and mobile phone applications for Sling were launched in Q1, the iPhone, iPad, Sling app ratings are in all time high with four stars on iTunes and the Android app also has solo ratings of 3.5 stars on Google Play.

We continue to improve the user experience with DISH Network customers via Dish Remote Access and Dish Online. Both of our advanced data centers are now open and fully operational and are supporting our used cloud services and hosting offering. Our target customers will be requiring the highest level of enterprise security on fully managed and redundant networks, which we were fully build up for.

EchoStar-17/ JUPITER, our Ka-band satellite under construction Space Systems/Loral has successfully completed the final major test phase. The satellite is now in the final assembly and checkout phase in preparation for shipment to French Guiana for the launch. Recently Arianespace completed their vehicle readiness review and approved the commencement of the final assembly of the Ariane 5 launch vehicle that will launch EchoStar-17. Crossing these major milestones paved the way for the plan launched in late June 2012.

These new order import continued a strong pace in Q1, submits orders in our North American enterprise business included T.J. Maxx, J.C. Penney, Bartlett National Stores, Government Enterprise Training Network and key international orders both from [UNSEB], Telemar, [Renner], RTcom, [Yasa] and Vodafone.

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