Good afternoon, ladies and gentlemen, and welcome to the EchoStar Corporation Conference Call for Fourth Quarter 2021. This conference call is being recorded. I would now like to turn the conference over to your speaker today, Mr. Terry Brown.

Thank you, operator, and good afternoon, everybody, and welcome to our earnings call for the fourth quarter of 2021. I'm joined today by Charlie Ergen, our Chairman; Michael Dugan, our CEO; David Rayner, COO and CFO; Pradman Kaul, President of Hughes; Anders Johnson, Chief Strategy Officer and President of EchoStar Satellite Services; and Dean Manson, General Counsel and Secretary. As usual, we invite media to participate in a listen-only mode on the call and ask that you not identify participants or their firms in your report. We also do not allow audio recording, which we ask that you respect. Let me now turn it over to Dean for the Safe Harbor disclosure.

Thanks, Terry. All statements we make during this call, other than statements of historical fact, constitute forward-looking statements made pursuant to the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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 the forward-looking statements. For a list of those factors and risks, please refer to our annual report on Form 10-K filed today with the SEC. All cautionary statements we make during the 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 any undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. I'll now turn the call over to Mike Dugan.

Thank you, Dean. Good morning, everyone. Actually, good afternoon here in Mountain Time. Welcome to our earnings call. The EchoStar team delivered another solid performance throughout 2021 with year-to-year growth in revenue, net income and adjusted EBITDA. We continue to supply the connectivity on which millions of consumers, enterprises, government agencies and communities depend. I am proud of the team's efforts and accomplishments and take pride in our ongoing innovation and industry leadership. Our agenda for the call today is to have Pradman and Anders provide updates on their business segments, followed by Dave Rayner, who will discuss our financials in more detail. From there, we will turn the call over to Charlie to address the change in management that was announced on Tuesday. We will then close, as usual, with a question-and-answer session. Pradman?

Thank you, Mike. I'd like to echo Mike's comments and say that I'm extremely proud of our team's performance and our financial results. Hughes' 2021 revenue and adjusted EBITDA were our highest on record. 2021 revenue increased 5%, and adjusted EBITDA increased 9% over last year. Our adjusted EBITDA margin in 2021 was 40.4%, 150 basis points higher than 2020. These strong financial results are driven by our innovative products and connectivity solutions and the efficient management of our business. We continue to focus our efforts on optimizing financial returns while investing in technology solutions to grow our business. Now let's talk some specifics on the fourth quarter, beginning with North America. We continue to manage our U.S. consumer broadband sales and marketing efforts proactively to optimize our service to existing subscribers. This is especially critical as we manage the business within our current capacity constraints. Not surprisingly, our U.S. subscriber base declined by approximately 30,000. At the same time, our U.S. retail ARPU remained strong because our subscribers' bandwidth usage continues to grow. We expect the subscriber and ARPU trends to continue in the near term as consumers use more and more data, which is why we have adjusted our consumer service plans in the U.S. to offer more data and help better meet our subscriber needs. In short, demand for our service remains high as the large addressable market of unserved and underserved households persist in the United States. Our North American enterprise group had a very strong fourth quarter with more than $140 million in closed orders. These include upgrades and extensions with 7 major customers and the addition of an exciting new brand in the restaurant market. That customer selected a full stack of solutions from us, representing a true business partnership as we manage their networks to help them achieve their business goals. The value of our enterprise solution set was reinforced once again by industry-leading placement in the Gartner Magic Quadrant for global managed service providers and the Frost & Sullivan Radar report. Both our defense and civilian government teams were very active in Q4. In the defense market, we had major award wins within popular defense to provide a stand-alone 5G private network at a navy base. For this project, we are in the position as the prime contractor integrating technologies and services from numerous partners to deploy secure 5G capabilities for base operations. We also secured wins in both the federal and state markets with both new and expanded procurement contracts for multiple state agencies. As part of our OneWeb program, we saw the successful completion of a major milestone and the deployment of 8 gateways, enabling initial service launch in November. We are planning on a very active 2022 as we complete the gateways that enable OneWeb to expand their coverage areas. Now let's talk about our international operations. Similar to the U.S., our Latin American consumer offering has become capacity constrained in certain markets, and our subscriber base declined by approximately 18,000. We continued our efforts to realign capacity requirements on a per subscriber basis, which we anticipate will improve customer satisfaction and continue to drive higher ARPU across all countries. In Q4, we crossed 1,000 active sites in Colombia in support of a digital divide project and this deployment continues to grow. In addition, we were awarded a number of projects in Peru, Colombia, Chile and Mexico. We have also now crossed more than 2,000 active community WiFi sites. We are making progress on our plan to increase the yield on our capacity through a mix of high-value subscribers, community WiFi and enterprise opportunities. We completed the formation of our joint venture in India with Bharti Airtel, now operating under the Hughes Communications India brand. With unmatched reach and scale, the company is the largest satellite service operator in India, that position amid the changing regulatory environment to serve the converging connectivity requirements of business and government customers with an enhanced product portfolio and operational efficiencies. We also announced a 6-year strategic agreement with OneWeb to provide LEO connectivity services across India. Hughes India will deliver the services to enterprise and government customers providing network design, equipment, installation, operations maintenance and help their support. We anticipate these Hughes services to begin in 2023. In terms of system sales, we had a number of new wins. In Mexico, 2 satellite service providers selected the JUPITER system to provide services to more than 3,000 sites. In Asia, a maritime client ordered more than 8,000 JUPITER remote modules to be integrated into maritime terminals and operated on a single network. In Indonesia, the total number of sites deployed in support of a government service program has now crossed more than 2,007 backhaul sites. Eutelsat has continued to expand its network deployment over the Konnect satellite. Finally, our JUPITER 3 satellite continues to progress. Based on updated information from Maxar, we anticipate the satellite to launch in the fourth quarter of 2022. The satellite will leverage the latest innovations to lower our cost per bit and increase our capacity and performance with higher-speed service plans. We continue to build out the ground infrastructure that will enable services on JUPITER 3. So all in all, it was a very strong year, and I look forward to another productive year in 2022. Let me now hand it over to Anders.

Thanks, Pradman. Good afternoon. EchoStar Satellite Services revenue for Q4 was $5 million, up from the fourth quarter of last year. We remain focused on pursuing Ku-band revenue opportunities as the transponder capacity market continues its slow recovery. ESS backlog was $10,400,000 as of 12/31/21, up 55% from last year. Our EchoStar Global 3 satellite is now in use as a test platform for the development of our global S-band capabilities. In December 2021, our European subsidiary, EchoStar Mobile's development partner, Sequans, a leading provider of cellular IoT chips and modules, announced that LTE Band 65 support is now available on its Cassiopeia LTE advanced platform. The enablement of Band 65 in Sequans chips and modules lays the foundation for EML's commercial development efforts in multiple areas during 2022, particularly in the air-to-ground networks and in unmanned aerial systems. EML continued live testing of LoRa-LR-FHSS technology over EchoStar XXI from multiple locations across Europe. Supported by our development partner, ProEsys, EML continues to see very encouraging results, both in fixed and mobile testing. In March, EML will present at the LoRa Alliance's World Expo in Paris. At that event, EML expects to formally announce the launch of an alpha service to EML's early adopting partners across Europe. We continue working on multiple fronts towards our long-term strategic objective of taking 5G to the next level through the full integration of S-band satellite services into global 5G networks, providing truly seamless worldwide hybrid connectivity. I'll now turn it over to Dave.

Thank you, Anders. As usual, my narrative will include comments on adjusted EBITDA, which is reconciled to a GAAP measure in our press release. Consolidated revenue in the fourth quarter was $499 million, up $9 million compared to the same period last year, driven by our Hughes segment. Hughes equipment revenue increased $19 million from higher sales activity to both domestic and international enterprise customers. Hughes service revenue decreased $10 million, primarily due to the lower U.S. consumer subscribers. Consolidated adjusted EBITDA in the fourth quarter was $160 million, a decrease of 4% from last year. Hughes adjusted EBITDA in Q4 was $178 million, down by $10 million from the same period last year. The decline in Hughes adjusted EBITDA was driven primarily by lower gross margin due to the change in revenue mix as well as higher selling, general and administrative expenses. Corporate and other adjusted EBITDA was a loss of $21 million this quarter compared to a loss of $24 million last year. The primary driver of the lower loss was lower corporate spend, primarily on legal expenses, partially offset by lower earnings of unconsolidated affiliates. Net loss was $80 million in Q4, a decrease of $77 million from last year. The decrease was primarily due to the impairment of our DISH Mexico equity investment in the fourth quarter, up $55 million; losses on investments of $50 million in the quarter; and unfavorable changes in foreign currency exchange rates. These items were partially offset by lower net interest expense of $19 million. Capital expenditures in the quarter were $86 million compared to $114 million in Q4 last year. Free cash flow, defined as adjusted EBITDA minus CapEx, was $73 million during the quarter, increasing $20 million from the same period last year. Inflation began to impact our operations in late 2021 as we have experienced increased costs in certain functional areas, including field services and customer care that are labor-intensive. We are making every effort to minimize this impact on our operations and protect our margins. In the fourth quarter of 2021, we bought back 1.2 million shares of our stock in the open market at a cost of $30 million. Our balance sheet remains strong, and we continue to seek opportunities to deploy cash for growth. Let me now turn it over to Charlie before we go to Q&A.

Thanks, Dave. I just wanted to join the call to thank Mike for your service. Mike and I started working together in 1990, so it's been a long road together. Most people probably don't realize just what important part Mike played in terms of our DBS business and our satellite fleet. He was really the architect of our digital set-top boxes and engineering and all the satellite stuff that we did. And of course, obviously, he has a long tenure here at EchoStar when we split that company off. So a job well done, Mike, and thanks for all your loyalty and effort in where we're going. But at the same token, we're excited to have Hamid Akhavan starting with us, bringing a different set of skill sets that we've had here in the past. He is certainly a very technically competent individual with engineering skills who will certainly understand many of the things we do from an engineering perspective. But he also brings experience in the private equity business and his experience in telco. We think these are all areas where, given our cash position and given our satellite fleet and where we think connectivity goes, these are all things he can be very, very helpful with. So with that, who are we taking questions from?

We're turning it over to questions. Operator?

The first question comes from the line of Rick Prentiss of Raymond James.

I'll echo my congrats, Mike, on your career, and enjoy your upcoming retirement.

Thank you.

A couple of questions, probably targeting them to Charlie since you've joined us today for the EchoStar call. 2 Charlie opportunities for me today. The top question we got yesterday was obviously the new CEO announcement. Can you help us understand, does anything change with the EchoStar story with Hamid coming in? And what do you see as the top 2 or 3 priorities you want him to focus on?

Is that question for me?

Yes.

Well, I think he brings a different background. And I think what we've been able to do over the years is put a lot of strategic things in place. We have a strong balance sheet, particularly for this industry. There are lots of opportunities out there, and whether that be consolidation within the industry or new places to go. He brings an expertise, a rare expertise that he has, both private equity experience and technical experience. He will focus the company on the areas that we think we need to go. I think the areas we have tremendous opportunity. If you look at it as we're a connectivity company, we have done well with satellite, but there are tremendous opportunities terrestrially. There is tremendous opportunity to tie in satellite with telco. We know that we have been asleep, and we haven't done what we needed to do in areas of growth such as the Department of Defense, where we are not as big a player compared to most in our industry. We know that private networks are going to become a big part of where companies go, and we have a lot of expertise and technical ability there. We have a new generation of satellites going up with JUPITER 3 that can bring connectivity to consumers and enterprises. From what I know about that, the wireless business also provides backhaul for telco. All those things get mashed together, and he brings great experience to that. It will be important for our shareholders to get to know him and ask this particular question to him. We will give him 60 days. For the March conference call, you will get a chance to ask him all those things directly. Actually, he won't get 60 days. He'll get 30 days, which is plenty of time. We have a rule here that you can blame the other guy for 30 days for anything that goes wrong. Mike is going to be blamed up until April 30, and then nobody can blame Mike for anything. But he'll get blamed for everything for 30 days. But after that, it's all good.

The top question we're getting today, obviously, just top down significantly. The market is not getting what we think we see as opportunity. You guys see the opportunity given the stock buybacks. Maybe just need to have an Analyst Day like the DISH announcement. As you think about EchoStar strategically and you mentioned Hamid's got that strategic sense, what are the benefits of being public at this point? Given the large cash balance, you have been buying back stock and the market doesn't see what I think I see. And I'm being told so many days, I must be stupid then. What are the benefits to being public?

Well, the advantage of being public is liquidity. I mean it's liquidity and access to capital markets maybe in a more robust way than you would get. By being public, if your stock was trading at a better multiple, you also have a currency from an M&A perspective. That's not the case, obviously, with EchoStar. EchoStar is not in a situation where they can use stock for M&A transactions, although they have cash that they can. Those are the benefits of being public. Obviously, the company has bought back some stock. When the Board looks at the investments we can make, the company has been willing to buy back stock based on the value and the multiple that we see out there. I think internally, we're a bit more confident than perhaps Wall Street is.

The last one for me then is it's come up a couple of times. Last quarter, I think Steven brought it up as well. How do you view how EchoStar and DISH can work together? And when can it become more obvious to the marketplace and what that might mean?

Well, there's a lot of cross-pollinization in terms of opportunity. I think we'll see more of that. Satellite, I believe when you look at connectivity, you're not going to do that around the world without satellites. EchoStar Hughes, in particular, has real expertise in satellites, particularly geosatellites, that's a significant piece of where connectivity has got to go. The world is changing a little bit with LEOs and MEOs, and we have a good understanding of that, especially as we have been a strategic engineering partner for OneWeb, which is one of the first massive LEOs. We gained a lot of expertise there. So there is a lot there. DISH is focused on the terrestrial side of the business. When you put those two companies together, both companies know each other in the same hometown and have a lot of expertise to work together. That doesn't mean that EchoStar Hughes won't work with others, and it certainly doesn't mean that DISH would work exclusively with EchoStar. A lot of times, we see opportunities at EchoStar, and we realize it might be beneficial for DISH or vice versa. I think you'll see opportunities for both companies going forward, maybe in a way that we haven't in the past.

Next question comes from the line of Chris Quilty of Quilty Analytics.

I've got a maybe tough, but I think important strategic question. So stick with me here. Historically, the space industry has been geo-centric. When we look at your strategy with the JUPITER series of satellites, you've gone down that path. Your principal competitor, ViaSat, didn't order one. They're building three and were already planning for a ViaSat-4. On the flip side, many traditional GEO operators have taken up a LEO strategy. My question is, are we going to have a good period here for a year or two where you're going to grow and then we're going to sit and wait for two years? Or do you understand the landscape enough or have enough conviction to put some of that capital to use and pick a path? And which path is it?

Yes, that's an excellent question. We have attempted to acquire some companies, and when our stock performed well with better valuations, we were able to do so. In the past, we made offers for Inmarsat that exceeded their final selling price. Since a significant portion of their sale was stock-based, the actual prices decreased considerably. The LEO -- JUPITER will increase, leading to some growth, but soon we will face the choice of either continuing to build GEOs, which take a long time, or exploring a different direction. That's why we have Hamid, as he helps navigate those challenges. On the LEO front, we are currently in a holding pattern due to the numerous LEO projects, making it difficult to predict who will succeed. The economics for LEO can be complex since over 70% of the time we are over water. The economics at Starlink differ due to launch ownership, which affects the overall assessment. We prefer to provide the tools and resources to the players rather than take on the role of the gold digger.

So specifically on the GEO market, is there any reason to not commit to a large high-throughput satellite for the Indian market, given that the regulatory environment has finally come into view?

Yes. Chris, this is Pradman. We are looking at that very closely right now. We see the need for more capacity. Capacity is a limiting factor for our growth right now. We're looking at different ways to get capacity. The optimum configuration that we believe is going to win out in our business is a combined LEO-GEO strategy because GEOs are good for high-density coverage of very dense population areas and we get the lowest cost with GEOs. The LEOs are important to provide coverage to a large area, and I think you'll see from our perspective, over the next five years, systems being deployed with this LEO-GEO architecture. We hope to use our existing partnerships to do this and own some of the assets needed.

Got you. And maybe a follow-on question about the technology. Is there a clear path for what follows JUPITER 3? Is it just a bigger version of JUPITER 3? Or are you considering different frequency bands or optical technology?

Yes. I don't think it's a technology issue in terms of inventing something new. JUPITER 3 has tremendous advances in technology. I think the next step will be the multi-transport technologies. We'll mix GEOs and LEOs to get the most efficiency of our networks. We could take the JUPITER 3 technology to the next step but that might not be the best use of our assets. We'll create these partnerships to combine GEOs and LEOs to build new types of constellations as our next set of investments.

Yes. Chris, we continue to pursue parallel development paths. We are working independently with specific applications that hold market promise because while the markets don't exist yet, there is a lot of money chasing their development. One area is the unmanned aerial vehicle market, where we're getting in early with development partners creating the ecosystem. We're trying to position S-band as one of the go-to frequencies given its lack of existing uses, which allows us to deliver secure communications without interference issues.

Great. I just argued for you guys spending a lot of money on a lot of different stuff. Who is going to make those decisions on whether to invest in small sat, S-band constellation versus high-throughput satellites or M&A? I mean how do you balance those in terms of capital deployment?

Yes, this is Dave. The decision starts with management and goes up through the Board when deploying significant capital. Right now, we're not limited to the cash on the balance sheet. We're virtually debt-free at this point. We've got the ability to leverage the company if we see multiple opportunities, but it's up to management to recommend direction to the Board, and the Board has been very supportive.

I appreciate some follow-up. In the fourth quarter, Dave, you called out that there was higher SG&A in the quarter. Can you help us understand what that was? Is that a new run rate? Or was there something out of a period that we should be aware of? And then I've got a strategic one.

No. I think the run rate will be a bit better than what we had in the fourth quarter. We had some higher-than-normal costs in certain line items due to unique circumstances. I would expect SG&A to be a bit better over the next couple of quarters. As we get closer to the JUPITER 3 launch and the initiation of new services, I'd expect to see selling and marketing costs ramping up later in the year, obviously, as we approach the launch.

There's a lot of frustration in the marketplace today as investors are trying to figure out EchoStar's strategy. When can we have a clearer view of EchoStar's direction and also perspectives on guidance?

Yes. This is Charlie. The Board has been asking those exact same questions to management. It's important to have a good technical background, a business background, and that's what Hamid brings. His first 30 days will be very focused on reviewing all of our strategic initiatives. I expect he will focus on 1 or 2 and convince the Board on direction. I see 3 or 4 things I like, but ultimately it’s up to management and the Board to dig in. We're focused on strategic things we can do and I think over the next quarter, you’ll start to see some of that. By the end of the second quarter, we should have a clearer vision. I believe investors will also begin to understand a bit more during that timeframe.

Yes. Operator, so we'll probably just do a quick final comment here and then shut the conference down.

Yes, we're kind of running out of time. I just want to thank you all for your support over the years. I appreciate Charlie's comments. We have worked together longer than I've been married. It's been a long time. I am committed to Hamid. Just to be clear, I was part of the interview process, and I'm very excited to see him come on board. I'm going to remain on the Board. I told Hamid and the Board I’ll make myself available to help him get up to speed. I’m excited about what's coming, and let's see how it goes. Thank you. Thanks for joining.

Thank you so much to our presenters and to everyone who participated. This concludes today's conference call. You may now disconnect. Have a great day.