Hughes Satellite Systems

Transcription

1 Hughes Satellite Systems October H /8/2012

2 Safe Harbor This presentation contains forward-looking information, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that is based on management s beliefs and assumptions, current expectations, estimates and projections. Such information, including information relating to the Company s expectations for future financial performance, is not considered historical fact and is considered forward-looking information under the federal securities laws. This information may contain words such as believes, anticipates, plans, expects, intends, estimates or similar expressions. This information is not a guarantee of the Company s future performance and is subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to differ materially from those expressed or implied by this forward-looking information and include, without limitation, demand and competition for the Company s products and services, and other risks or uncertainties identified and discussed under the caption Risk Factors in the Company s Annual Report on Form 10-K for the year ended December 31, 2011 and the quarterly reports on Form 10-Q filed with the Securities and Exchange Commission and in other documents the Company filed with the Securities and Exchange Commission from time to time. We do not guarantee that any future transactions or events described herein will happen as described or that they will happen at all. Given these uncertainties, you should not rely on forward-looking information. The Company undertakes no obligations to update any forward-looking information, whether as a result of new information, future events or otherwise. 2 H /8/2012

3 EchoStar Business Segments EchoStar Corp. $3,268 $1,433 EchoStar Technologies & Other $1,835 Set-top hardware for satellite TV service providers and place-shifting technology Digital broadcast operations EchoStar Satellite Services $284 Hughes $1,149 Leases transponder capacity on satellite fleet primarily to Dish Network, Dish Mexico and secondarily to government entities, ISPs and broadcast news organizations North America Consumer North America Enterprise International Enterprise Note: Revenues above are in $ millions and are TTM as of 6/30/12, Subscriber Count as of 6/30/12 Largest satellite broadband ISP to North American consumers ~626K subscribers World s leading provider of broadband satellite network solutions to enterprises VSAT technology pioneer 3 H /8/2012

4 Customer Sample Satellite Services Enterprise Broadband Services 4 H /8/2012

5 Satellite Services Satellite Fleet 21 EchoStar owned, leased, and managed satellites 5 H /8/2012

6 Satellite Operations Transport Broadcast Satellite Services (BSS) Capacity for direct-to-home service operators DISH Network, Dish Mexico Fixed Satellite Services (FSS) Leased capacity to managed service providers Occasional use capacity leases 6 H /8/2012

7 Satellite Operations Spacecraft Management Flight operations 24/7/365 monitoring Spacecraft and launch vehicle procurement Regulatory and spectrum management Payload management Health and status reporting In-orbit test management Spacecraft design and engineering 7 H /8/2012

8 Hughes Company Overview Diversified Revenue and Customer Base ($ in millions) Consumer segment Provides broadband access to the Internet for consumers 59% market share* Enterprise segment Provides managed broadband network services and products to large, medium, and small Enterprises Develops and supplies mobile satellite systems, terminals, and gateways to mobile satellite providers Strong backlog estimated at June 30, 2012 of ~ $1 billion Consumer market share* NA VSAT market share* Global VSAT market share* Other 5% IDirect 6% ViaSat 3% Other 3% IDirect 6% Other 10% ViaSat (WildBlue) 36% Note: LTM as of 3/31/12 Hughes 59% Gilat 21% Hughes 67% ViaSat 9% Gilat 25% Hughes 50% 8 H /8/2012 * Source: Comsys

9 Strong and Stable Enterprise Business with High-Quality Established Customers Overview Historical Revenue Backlog Stable managed services business Growing aggregate revenue backlog ($ in millions) $752 $841 $835 $1,064 $1,036 Strong VSAT market share of 67% and 50% in North American and global markets, respectively* Enterprise contract term is typically 3 to 5 years thus provides good revenue visibility Diversified revenue: top 10 clients make up ~14% of total revenue Recent significant contract wins include: Yahsat, Row 44, T.J.Maxx, ExxonMobil, and Camelot Financial Services Oil & Gas Entertainment UFO Key Customers Food Retail Telecom 9 H /8/2012 * Source: Comsys

10 The Gen4 Message HughesNet Gen4 combines our network of high-capacity satellites, engineering expertise, and customer support to give customers more of what they want from the Internet HughesNet Gen4 allows customers to get more from the Internet with the greatest download capacity of any satellite Internet provider* HughesNet Gen4 gives customers the speed they need for and Web surfing plus dramatically improved performance for high-bandwidth applications like streaming music and video The new standard of excellence in satellite Internet 10 H /8/2012 * Source: Hughes estimates

11 EchoStar XVII with JUPITER Network Technology Launched July 5, 2012, EchoStar XVII is the latest addition to the Hughes Satellite Network EchoStar XVII is one of the largest satellites ever built, providing over 140 Gbps of throughput to North America JUPITER network technology is our next-generation broadband satellite platform All-new gateway architecture with state-of-the-art virtualized infrastructure New embedded operating system and all-new software on the HT1000 VSAT IDU New distributed Network Management System (NMS) allows significant scalability New Web acceleration servers enable optimization of the latest Web applications 11 H /8/2012

12 Most Powerful Network The combination of EchoStar XVII with SPACEWAY 3 represents one of the most powerful satellite networks in the Western Hemisphere SPACEWAY 3 10 Gbps capacity Largest commercial satellite in North America Bandwidth-on-Demand Dish-to-dish connectivity 1 5 Mbps downloads for consumers EchoStar XVII Edmonton ~140 Gbps total capacity Over 100 Gbps outbound capacity Advanced adaptive coding and modulation for maximum transmit and receive availability Optimized for broadband access user_19 user_03 user_10 user_27 user_02 user_35 user_43 user_51 Boise Regina user_01 North_Cutbank user_09 user_08 user_04 user_05 user_06 Bilings user_07 user_16 Rapid_City user_18 user_12 user_14 user_11 user_13 user_15 user_17 North_Platte Salt_Lake_City user_21 user_23 user_25 user_20 user_22 user_24 user_26 Englewood Grand_Junction user_29 user_31 user_33 user_28 user_30 user_32 user_34 Flagstaff Albuquerque Amarillo user_37 user_39 user_41 user_36 user_38 user_40 user_42 Tucson user_45 user_47 user_49 user_44 user_46 user_48 user_50 Midland El_Paso user_52 user_54 user_56 user_53 user_55 user_57 Del_Rio user_58 user_59 user_60 12 H /8/2012

13 When you combine two of the most powerful satellites with cutting-edge ground technology, you get: SPACEWAY EchoStar XVII 13 H /8/2012

14 Introducing the NEW HughesNet Gen4 Service Plans - Retail Power Family A new plan line-up designed to deliver: More download capacity: For today s updates, downloads, and streaming More speed: For better video and online experience More flexibility: The tools and services you come to expect from Hughes Plan developments: Monthly Allocations: Hughes is moving from daily to monthly bandwidth allocations Anytime Bytes: Each plan is assigned a bucket of Anytime Bytes that can be used 24/7 throughout the month Bonus Bytes: Certain plans are allocated Bonus Bytes. Bonus Bytes are available between 2 a.m. and 8 a.m. and are incremental to Anytime Bytes Total Allowance: The total GBs allocated to a plan per month 14 H /8/2012

15 Power Family of Plans - Retail SPACEWAY 3 Power Downstream (Mbps) 5 Upstream (Mbps) 1 Anytime (GB) 10 Bonus Bytes (GB) 10 Total Allowance (monthly) 20 MSRP $59.99 EchoStar XVII Power Power PRO Power MAX Downstream (Mbps) Upstream (Mbps) SPACEWAY Anytime (GB) EchoStar XVII Bonus Bytes (GB) Total Allowance (Monthly) MSRP $59.99 $79.99 $ H /8/2012

16 Designed for TODAY S and Tomorrow s Broadband Users Today Usage is split 35% for video clips or movies 35% for browsing 30% for file downloading 15-to-1 download-to-upload ratio 2015 Usage will be tilted with the dramatic rise in video downloads 50% for video clips and movies 28% for browsing 22% for file downloading 20-to-1 download-to-upload ratio Ratio of Download to Upload Since 2006 Key takeaway: Satellite design needs to focus on total download capacity 16 H /8/2012

17 Consumer Sales Channels Indirect Channel Strategy Tactics Direct Channel Strategy Tactics Sales Agents National footprint Multiproduct (cross-sell) Call Center orientation Includes DIRECTV as an agent Online Direct mail Print Affiliate Broadcast TV spots on DIRECTV and DISH to drive calls and Web traffic DIRECTV & DISH TV spots Dealers Local presence Sale and serve Orientation Small retail Referrals Local advertising Canvassing Direct Mail R s sent to nonorders Continual tests Postcards to targeted geographic/ demographic Retail Big box retail Less targeted High cost\low demand In-store kiosk Web Drive volume to Web site for online ordering and to contact via unique phone # Paid search Organic search Online ordering Wholesale DISH Network Frontier Communications Bundling Sales data Centers service with video Customer Care Marketing Bill under Stuffers partner brand to unserved areas Other Calls from customer care, used equipment, & previous campaign phone numbers Transferred calls, Customer callbacks, and used equipment 17 H /8/2012

18 Hughes Satellite Systems Corporation Financials by Segment and EBITDA Reconciliation in $ 000s For the Six Months Ended June 30, 2012 EchoStar Satellite Services Hughes All Other and Eliminations Consolidated Total Total revenue 145, ,043 (1,848) 700,216 EBITDA 105, ,426 2, ,518 Interest, net (27,012) 8 (46,970) (73,974) Income tax benefit (provision), net (5,359) (10,702) 16, Depreciation and amortization (62,878) (111,247) - (174,125) Net income (loss) attributable to HSS 10,423 17,485 (28,326) (418) For the Six Months Ended June 30, 2011 Total revenue 137,399 81, ,421 EBITDA 104,696 20,233 (33,733) 91,196 Interest, net (17,997) (2) 1,171 (16,828) Income tax benefit (provision), net (14,800) (1,611) 8,974 (7,437) Depreciation and amortization (47,052) (16,033) 157 (62,928) Net income (loss) attributable to HSS 24,847 2,587 (23,431) 4,003 EBITDA is not a measure determined in accordance with GAAP and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP. Conceptually, EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures. EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding liquidity and the underlying operating performance of our business. Management also believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in our industries. 18 H /8/2012

19 Hughes Satellite Systems Corporation Financial Highlights Balance Sheet in $ millions As of June 30, 2012 As of Dec 31, 2011 Cash, cash equivalents and marketable securities Accounts receivable Inventory Property, net 2, ,021.9 Other assets 1, ,588.2 Total Assets 4, ,248.8 AP, accrued & other liabilities Long and short term debt 2, ,533.1 Total Equity 1, , H /8/2012

20 Closing Highlights Large contracted revenue base with high visibility Product diversifying / enhancing transaction Contracts with established customers yield a $2.8bn backlog as of June 30, ESS backlog of $1.8bn - Hughes backlog of $1.0bn (not including Consumer business) Leading provider of diverse satellite services Market leader in Enterprise and Consumer business Strong platform of steady and predictable Enterprise and BSS/FSS revenues combined with high growth Consumer business Robust Consumer broadband operations Hughes Consumer segment has achieved strong historical performance, even through recessionary periods Subscriber increase from 180k in 2003 to over 624k as of June 30, 2012 Ability to leverage solid relationship with DISH Network and others for growth opportunities through wholesale platform Strong liquidity and deleveraging profile Strong cash flow profile of the business enables HSSC to deleverage quickly Cash and Marketable Securities of $221m at HSS and $1.6bn at parent, EchoStar Corp. as of June 30, H /8/2012