GERMANTOWN, MD, March 28, 2007 - Satnews Daily - Hughes Communications, Inc. said it had delivered on its business plan in 2006, posting encouraging operating numbers.
Pradman Kaul, president and chief executive officer, noted that wholly owned subsidiary, Hughes Network Systems, Llc (HNS), performed strongly during the year. HNS revenues grew 6 percent over 2005 to $858 million with profitability also very strong.
Operating income for the year was $58 million, a growth of 27% over 2005; Ebitda increased by 24% to $108 million in 2006 over 2005; and Adjusted Ebitda grew by 9% to $126 million in the same period. We generated $92 million of cash from operations in 2006, which is more than double what we generated in 2005."
Major revenue growth engines were the company’s consumer/SMB and mobile satellite businesses. Consumer/SMB subscribers grew 19 percent from 274,400 at the end of 2005 to 327,500 at the end of 2006. Revenue in the consumer/SMB business grew by 18 percent over FY 2005 to $292 million. Revenue from mobile satellite business grew 47 percent in 2006 over 2005, primarily through revenue from Thuraya, Terrestar, and ICO.
"Our North American and international enterprise businesses continued to be a steady revenue base contributing over half of HNS' total revenue in 2006, with significant orders from Exxon Mobil, Walgreens, Saudi MOFA, Enlaces Integra, Rite Aid, GTECH, Federal Express, Telmex, Galaxy Broadband, Murphy Oil, Jack in the Box, Sonic, Real Time, Yum Brands, and others. Overall, we are pleased that we have delivered on our business plan both financially and strategically in 2006."
"These impressive full-year results were a result of sustained quarterly performance, including a strong fourth quarter," continued Kaul. "We grew fourth quarter 2006 revenue by 7 percent and Ebitda by 13 percent over the fourth quarter of 2005. Adjusted Ebitda for fourth quarter 2006 grew 11 percent over the same period in 2005. The growth engines in the fourth quarter were once again the consumer/SMB and mobile satellite businesses; the consumer/SMB revenue grew by 19 percent in the fourth quarter of 2006 over the fourth quarter of 2005, and the mobile satellite revenue more than doubled in the fourth quarter of 2006 over the fourth quarter of 2005."
Grant Barber, executive vice president and chief financial officer said HNS’ revenue, Ebitda, and adjusted Ebitda showed steady improvement in 2006 over 2005. The company’s ongoing focus on working capital management resulted in a net generation of $92 million of cash from operations in the year ended December 2006, a significant improvement over year ended December 2005.
"HNS ended full-year 2006 with a strong balance sheet including $203 million of cash and marketable securities for HNS. The consolidated cash and marketable securities balance for Hughes as of the year ended December 31, 2006 was $214 million. I am also pleased to report that in February 2007, we closed a $115 million senior unsecured credit facility with a syndicate of banks, further improving our liquidity."
HNS reported that it had signed a contract with Mobile Satellite Ventures, LP (MSV) under which HNS will develop and supply MSV's Satellite Base Transceiver Sub-System (S-BTS). The contract value is over $43 million. The S-BTS is the central element of the base station, which will facilitate communication between MSV's satellites and terrestrial communications network.
Also in 2006, HNS said that the European Telecommunications Standards Institute (ETSI) has approved the Internet Protocol over Satellite.v2 (IPoS.v2) air interface standard, which incorporates the DVB-S2 industry standard with ACM (Adaptive Coding and Modulation). IPoS is the most widely deployed satellite broadband standard in the world. Pilot sites in the US and UK have been chosen for the introduction of BPTV, an innovative digital signage media service with advertising and unique BP programming content shown on screens placed at gasoline stations, as well as in-store.
The HughesNet Digital Media Solution that delivers BPTV programming encompasses the planning, installation, and remote operation of the screens, speakers and supporting broadband network infrastructure. Content broadcasting is delivered over HughesNet broadband service platform. In addition, Hughes provides program scheduling, management, and independent certification of advertisements, a critical issue for advertisers. The number of HughesNet consumer/SMB subscribers reached 327,500 at the end of the fourth quarter of 2006, a 19 percent growth over the same period in 2005.
HNS was named North American Space & Communications Company of the Year by global growth consulting company, Frost & Sullivan. The award is presented only to companies that demonstrate and exemplify the criteria set forth by Frost & Sullivan, such as technology innovation, market potential, proof of success, strategic marketing, revenue growth, new market penetration, visibility, and leadership.
Kaul said their fundamental message is the same today as it was twelve months ago: a strong enterprise segment that provides the core revenue with loyal customers who commit to long-term contracts, with growth being fueled by the consumer/SMB and mobile satellite markets.
"Looking ahead, we expect to commence commercial service on Spaceway-3, our next- generation satellite, in early 2008. We expect that Spaceway-3 will substantially reduce our costs and open up new revenue opportunities going forward in the enterprise and consumer/SMB markets. We believe that all the above, combined with the strong financial performance in 2006, have positioned HNS very well for 2007 and beyond."
Hughes provides broadband satellite networks and services for enterprises, governments, small businesses, and consumers. Its broadband satellite products are based on the IPoS (IP over Satellite) global standard, approved by the TIA, ETSI, and ITU standards organizations. Hughes said that to date, it has shipped more than 1.2 million systems to customers in over 100 countries.
