EchoStar Corporation (SATS) Q1 2023 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the EchoStar Corporation First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dean Manson, Chief Legal Officer. Please go ahead.

Thank you. Good morning, everyone and welcome to our earnings call for the first quarter of 2023. I'm joined today by Hamid Akhavan, our CEO and President; Paul Gaske, our Chief Operating Officer; Jeffrey Boggs, Senior Vice President of Finance; and Veronica Takacs, our Chief Accounting Officer. 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. 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 involves 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 for the year ended December 31, 2022, filed on February 2022 and our subsequent filings made 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 may 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. We refer to adjusted EBITDA during this call. The comparable GAAP measure and a reconciliation thereto are presented in our earnings release. I'll now turn the call over to Hamid.

Thank you, Dean and good day, everyone. Our agenda for the call today is as follows: First, we'll provide a brief overview of financial activity from the first quarter. After that, we will discuss our business strategy, which includes the 3 parallel work streams that are called Horizons and our progress on all 3. We'll then move to question-and-answer session. Let's start with our financials. Our revenue in the first quarter of 2023 was 440 million, lower by $62 million, compared to the same period of prior year. The revenue decrease in the first quarter was partially driven by our consumer broadband business due to capacity constraints and other related factors as we wait for the in-service of our JUPITER 3 satellite. We also had an anticipated decrease in our enterprise revenue, primarily due to lower domestic and international deployments and shipment timing for Q1. As mentioned previously, most enterprise orders are recognized over several years, which can create some variation and irregularity in our revenue stream, which is what occurred in the first quarter. However, we continue to generate momentum in this area of our business, with $215 million of new orders booked in the first quarter, increasing 38%, compared to the same period last year, bringing our total enterprise backlog to $1.6 billion. We are continuing to see success in our strategy to shift our efforts to opportunities within the enterprise market, which will continue to grow our backlog, diversify our business, and provide sustained cash generation through low capital requirements and through greater operating leverage. Our adjusted EBITDA in the first quarter was $135 million, a decrease of 19% from last year, primarily driven by the lower revenue. We continue to be disciplined on our cost structure in-line with the change in revenue mix to sustain our cash generation performance. Capital expenditures, net of receipt of refunds in the quarter were $44 million, compared to $112 million in the Q1 last year. The decrease was primarily due to lower spend on the JUPITER 3 satellite program and consumer premise equipment, as well as $15 million of cash received from Maxar, the manufacturer of the JUPITER 3 satellite as part of our agreement with them related to the manufacturing delays. Operating free cash flow defined as adjusted EBITDA minus capital expenditures was $91 million during the quarter, $37 million higher than Q1 of last year. We ended the quarter with $1.7 billion of cash and marketable securities. This balance excludes an additional $148 million of debt repayment proceeds received in early April. I remain confident about the strength of our balance sheet as it affords us the flexibility to explore investment opportunities. Let me now turn the call over to Paul, who will provide some additional specifics on the quarter and our Horizon 1 and 2 activities.

Thank you, Hamid. As a reminder, Horizon 1 is our near-term priority to maximize our current services and operations, while managing costs as we prepare for the launch of JUPITER 3/EchoStar 24 satellite. To that end, we continue to focus on operational efficiencies and yield optimization of our North America satellite capacity. In the first quarter of 2023, we again updated our HughesNet service plans to improve customer experience and upgrade subscribers to higher value plans. The changes in our service plans have continued to build on our strategy of creating a natural shift to higher capacity, higher-priced plans for our consumers, improving our ARPUs, while delivering an enhanced customer experience. We also remain focused on improving our cost structure through additional automation and improved processes. The market continues to react positively to our HughesNet Fusion plans, a considerable percentage of our new subscribers select Fusion plans, which generates some of our highest ARPUs. The plans have been well received by existing and new subscribers and we expect Fusion to continue attracting new customers and helping reduce churn, while improving ARPU. We believe that combination of our enhanced HughesNet and HughesNet Fusion plans will help us combat the ongoing competitive pressures in our industry. Moving forward to our North America enterprise business, we continue to expand our managed services footprint and notably announced that we completed the rollout of the Vitamin Shoppe secure SD-WAN network at their 700-plus retail outlets. We were also pleased to be recognized by Fortinet as their SD-WAN partner of the year. We had a strong quarter for orders in the retail petroleum segment and completed the deployment of two network upgrades that were awarded last year. In our OneWeb program, we continued deliveries of production gateways and systems as planned and expect to complete all the gateways in 2023 as scheduled. As of the end of the first quarter of 2023, we have produced and shipped more than 16,000 subscriber – satellite subscriber core modules for inclusion in OneWeb user terminals. We are also seeing significant interest in our Hughes LEO terminal, which includes our electronically steered antenna. And we are very pleased to have been awarded another large contract from a customer for a version of this terminal. We will begin deliveries of terminal products later this year, also enabling sales of our managed LEO services to the enterprise and government markets featuring OneWeb connectivity. In our Defense and Government Systems division, we secured numerous service renewals, including follow-on orders from Boeing for PTES, the Navy for additional work on 5G and one of our digital signage products for the Social Security Administration. We are pleased to participate in the ribbon-cutting ceremony for our stand-alone Open RAN secure 5G network deployment at Whidbey Island Naval Air Station in Washington State on March 30, which helped demonstrate the potential of 5G services in DoD applications. We look forward to growing our 5G capability at Whidbey Island Naval Air Station as well as on other DoD installations in the near future. Now to our international operations. We continue to allocate satellite capacity to address various enterprise applications in Latin America. As one great example of this effort, we announced a project with Stargroup to provide cellular backhaul services to hundreds of locations in Mexico. In other parts of Latin America, we continue to develop enterprise opportunities and are running pilots with several operators. As for our HughesNet service in Latin America, we remain focused on adding high-value subscribers, which is lowering churn and optimizing the yield in our existing Latin American capacity. In Brazil, we won a significant expansion of 800 vehicles for our fleet automation customer. In India we received an initial order for cellular backhaul services in support of the operator's universal services obligation services. And we were recognized in India by the Economic Times as Best Managed Service Provider, a prestigious recognition of the role Hughes plays in the Indian market. In terms of the JUPITER system equipment sales, we continue to win orders around the world. This includes a significant number of remote terminals for deployment on the Eutelsat KONNECT VHTS satellite. Additionally, as we announced, MEASAT selected the JUPITER system to enable broadband services on the MEASAT 3D satellite, which will help connect the unconnected across Malaysia. And we announced that UZ-SAT chose the JUPITER system to help bridge the digital divide in Uzbekistan. Now, let me focus on Horizon 2 activities. These include our efforts to bring JUPITER 3 into service for expansion of our offerings in North and South America, as well as growing and diversifying our global enterprise business. I'm pleased to report that the JUPITER 3 satellite is in the final stages of assembly. Maxar continues to work diligently and expects to complete and ship the satellite to the launch site in June. We are coordinating with SpaceX to schedule the launch of JUPITER 3 at the first window that SpaceX can allocate to yet, which is subject to preemption by certain higher priority government launches. Once launched, JUPITER 3 will deliver new broadband service in North and South America and quickly allow us to focus on growth by addressing the continued demand for high-speed broadband throughout the region. In preparation for the launch of JUPITER 3, the team is focused on developing service plans with higher speeds and more data along with higher speed HughesNet Fusion plans, creating the ultimate high-speed, low-latency satellite Internet experience to rival any LEO satellite Internet service. We believe the market is eager for these robust offerings and we plan to have a highly competitive suite of services to meet a variety of our customers' needs. Horizon 2 also has a strong focus on expanding our global enterprise business, including the government sector. We plan to leverage our managed services portfolio, hybrid LEO Geo business solutions and our manufactured products to pursue growth. Nascent signs of Horizon 2 direction can be seen in the large enterprise orders and 5G activities reported here today. Increased participation in this vast market segment is a key element of our diversification strategy as is improving our operational scale through potential small acquisitions, which we continue to explore. Now let me turn the call back over to Hamid.

Thank you, Paul. That was a good summary of our Horizon 1 and 2 activities from the first quarter of this year. I want to reiterate that while we are in Horizon 1, we are working on our other work streams, Horizon 2 and 3 in parallel and to that end, we have had a busy quarter. Let me now focus on Horizon 3 and our longer-term strategy to expand into new markets through both organic innovation, as well as potential acquisitions. While we continue to evolve acquisition opportunities, we are also evolving our S-band prospects. As we announced during the first quarter, we have begun construction of what we are calling the EchoStar LiDAR constellation of 28 LEO satellites. We are moving quickly to launch the first of these satellites to begin offering the store and forward Internet of Things, machine-to-machine and other data services starting in 2024. At the same time, we are pursuing many avenues of exploration for our global S-band assets. For instance, we continue to bring on new customers in Europe for our EchoStar Mobile LoRa-enabled IoT service. And we have recently demonstrated our direct to smartphone capabilities in Europe using NTN IoT over our EchoStar 21 satellite. We are testing similar services in North American markets using 2 DISH network satellites and we are actively working to expand our services into additional global markets. With what we are learning from these deployments, we continue to refine our plans for bringing the LiDAR constellation to market. These activities are not the only business development initiatives we have undertaken in service of bringing our global S-band network. We continue to actively engage with companies across the 5G NTN ecosystem to leverage the opportunities of the 3GPP Release 17 in developing a truly global 5G non-terrestrial network for real, anytime, anywhere device connectivity that is ubiquitous and transparent. Let me now turn it over to the operator to start the Q&A session.

[Operator Instructions] Our first question comes from the line of Ric Prentiss with Raymond James.

Good morning. Can you hear me okay?

Yes.

Yes.

Okay. Again, I want to start with, obviously, EBITDA came in a little better than we were looking for. And one of the areas that we noticed is cost of service seems a little light year-over-year and quarter-over-quarter. Were there any onetime benefits in cost of service and associated with that, when should we think about costs coming in ahead of the J3 launch that might cause cost of service to go up to a new level?

Well, I guess, first off, what you – I think you can see there is, there's been a focus on cost savings, efficient spend. And that's true in the operation of the systems, as well as trying to be more efficient with how we spend our sales and marketing dollars. So, across those two elements, that's the primary pickup for the quarter. That's – we believe that's a continuing trend until we get to the JUPITER 3 satellite.

Okay. And when you get to JUPITER 3, how should we think about incremental cost levels to kind of layer in that, that new infrastructure and support costs?

Well, two things. One, we already have ingested a lot of the costs since the ground network has been in place now for over a quarter, so you kind of see that already in the cost. Where we'll see additional spend will be in sales and marketing as we ramp up subscribers and you'd expect it's the same sort of growth you might see from the previous satellite launches.

Glad you finally have actually getting ready to ship in June, it sounds like. How should we think about how long from launch to in service will it take and is there any indication from SpaceX on where in the manifest you might be possibly so as we monitor the J3 going up?

Well, in terms of the actual launch of service, we expect that in the fourth quarter and it depends on exactly when we get the satellite in place and so on. But we would expect to be in full service in the fourth quarter.

At the moment, Ric, at the moment, we are in August to schedule the launch at SpaceX. So, June shipments, our satellite will remain at the SpaceX site. Currently, we are in the manifest for an August time line, as Paul mentioned previously, because there's not that many launch systems in the world right now other than SpaceX. Some of the military and government projects, as they call DX and DO projects take precedence. What we know so far, with all of those projects, we are still on the schedule for August.

Okay. Good. That helps. Last one for me. Obviously, Horizon 1, hopefully, almost done and then as you look for Horizon 2 in service in the fourth quarter, how should we think about Horizon 3. You gave us some color there. Some of the direct to smartphone, you're doing demos in Europe, testing in the U.S. But how would you think about the opportunity unfolding and when you can publicly kind of help us see the road map, particularly in that direct-to-device space, which seems – could be quite vast, but it might take some time.

So, I'll focus on that one – well, before I focus on that one, listen, the S-band opportunity is not the only thing we're working on Horizon 3. You have seen how actively and aggressively, we are pursuing enterprise business and our backlog is growing at an incredible pace and we expect that to continue. So, Horizon 3 is very promising for us in the enterprise sector. And so I'll leave that for now on the side. And coming back to the S-band and direct-to-device, we couldn't be busier. We have already mentioned the LiDAR constellation, which will have – give us a global coverage using the S-band, the global coverage of IoT services and direct to not smartphone but other devices. And we see a lot of demand for that. And this is something as a result of our early trials in Europe of last year using our GEO satellites. But and we are in the design phase and design and engineering phase of a larger system, which we expect to come into service just a couple of years later after LiDAR. We have not disclosed the exact timing for that and exact specifics of that, simply because that's still in development and somewhat strategic to our business. We don't want to disclose that until we have secured certain additional gains before we come to market with additional information. But you should expect that in the second half of this decade, we'll have 5G, what we call wideband service based on a new constellation, much larger constellation that we're working on. As time goes on, not – hopefully not too distant future, we'll disclose all the details of that, but we're not able to do it, Ric, today.

Makes sense. Stay well, guys.

Our next question comes from Michael Rollins with Citi.

Thanks and good morning. Curious to explore the ways in which EchoStar is working with DISH. Currently, I think you mentioned one of the 5G Open RAN examples where you may be working with DISH and the filings for both companies still refers to the possibility of additional opportunities to work together. And I'm just kind of curious what the range of possibilities that could include and specifically, could that include co-investment opportunities, as well as merger scenarios between the two companies? Thanks.

Look, our relationship with DISH is very collaborative. We obviously have an arm's length relationship with the company as – we're both publicly traded stocks. And we highly guard that aspect of the relationship to make sure we are obviously protecting shareholders' best interest. Having said that, we find ourselves, in a number of cases and opportunities in a mutual beneficial situation. So, I think we have a number of areas where we can collaborate. So, we highlighted a couple of those. Our spectrum filings around the world are very complementary for theirs in terms of the S-band spectrum. So, and we have satellite S-band coverage over Europe. They have satellite S-band coverage over United States and Canada and North America essentially. And so, to the degree that we can improve a service in Europe, we can collaborate with DISH. And we have not disclosed all the details of the agreements as some of the agreements are preliminary and has been limited to [small cap] [ph] services. But as we are – our aspirations are growing in terms of our S-band offerings, we'll put in place several agreements with DISH for the use of their assets and potentially work with them on their 5G core network capabilities where we probably do not want to build in-house at EchoStar. They have the only pure 5G core in the world and also is available, is unused, underutilized. I think that's something that we can in an outsourced fashion work with them. We're not at a point where those agreements are necessary yet, but we'll, in due time, we'll disclose any related party transactions related to those activities The 5G Whidbey Island has been just the – we have used DISH as a sub to our programs, though we have had a number of subcontractors and service providers, whether it be Cisco, whether it be DISH, whether it be some of the others that we have worked with, is a number of piece providers that we have kind of brought together as a complete solution to the Navy. And for the time being and going forward, our relationship with DISH will remain in the same construct. There is no reason to – for us to consider any other alternative at the moment. We're not looking for joint acquisitions with DISH. And that's not – and we're not working on any – as we said in Horizon 3, we're looking to acquire companies. If you're asking us whether we are co-investing in companies, we're not co-investing in companies with DISH. That's purely an EchoStar activity.

And just one follow-up on Horizon 3. What are the things that investors should be looking out for that could accelerate the timetable in which the investment case and maybe even some of the return opportunities become more visible and tangible in terms of quantifying what that would represent for EchoStar?

So for EchoStar, two things that we can point you to. One is that as we go forward, we'll report our enterprise backlog and these are booked, committed contracts. These are not just funnel activities. These are sold. And I think you should keep a close eye on that and as we will report our progress on a quarterly basis. And as you look at that, you could see the trend of revenue in the future. I mean this is different, our consumer. Consumer has a disadvantage that you really don't know the trend in a very long horizon. But in enterprise, you actually see that. One of the advantages of the enterprise business is that it can grow in very large chunks. For instance, if there is a – it's possible to – within a year sign a, or within a quarter $0.5 billion enterprise over there. But how long does it take to get $0.5 billion consumer revenue, right? I mean, so enterprise can grow very, very large, in very quick steps. So, first of all, we encourage you to take a look at our backlog and carefully examine that because that shows that the trend a few years down the road will be – how much of our business is going to be enterprise revenue and how much of it is going to be consumer. We're not putting any projections today, but we've given some of the – one of the biggest drivers, which is the backlog, is the biggest proof of the future benefits. And we try to be more precise with that as we go forward. We try to give you a little more timing as we are finding that useful to you and ourselves, will certainly will disclose more of that potentially in second half of this year, beginning of next year. So, that's one. The second one is as it comes to the S-band development. Look, one of the most – the timing in this industry, as you're well aware, to develop satellite systems takes several years. And so, we – that's what we call this Horizon 3. You should start seeing as of 2026, 2027, the biggest impacts, potentially first impacts are shown up. And this is not just because of the satellites, but also please think that to provide direct-to-device for devices that are 5G compliant and Release 17 3GPP compliant for direct-to-satellite, those devices, the chipsets are just beginning to be manufactured, starting now. That will take a 1.5 years cycle for the chipsets to be ready, then it takes another year for the chipsets to get to the phone, so phones get out to the market. And on the very first day when then phones are introduced, I mean, that's not a too many phones. I mean that, that very day, the small number of phones are released, right, for that base to grow, it takes another year. So, when you add that up, you're talking about 4-year window, 3-year window from here, 3- or 4-year window. And that's exactly the same window that the satellites will take to be prepared. These are hundreds of satellites in large sizes to be produced and so as I said, this will be vastly impactful in the second half of this decade. I would say, starting with 2027 time line, you should expect to see very material, meaningful revenues from them forward. By the way, that is only related to the big 5G wideband. In between, we have the LiDAR constellation, which as of 2024, which is just next year, 12 months from now, potentially 18 months from now, we will be generating revenues from that system in between, while we get to the larger system. I hope that gives you a bit of a road map for where we think the revenues will fall. And we hope to give you more information, again, potentially end of this year, beginning of next year as we solidify our segment reporting and some of these plans.

That's helpful. Thank you.

[Operator Instructions] Our next question comes from Chris Quilty with Quilty Space.

All right. Can you hear me?

Barely, but yes.

Okay. Sorry about that. So, how many satellites is that new constellation going to have? Just kidding. I had to at least ask. Actually, Hamid, I wanted to follow up on something you were saying about the backlog. And more specifically, can you give us a sense – I mean, obviously, it's enterprise in general but is there a specific area where you're seeing the strongest growth in that backlog, whether it's the government side? Is it retail? Is it oil and gas? Any color in that direction?

I don't know if I can be disclosing that. I think we're seeing growth in a number of areas, including areas, segments that we have not had a historical business yet. And I think in the hopefully not too distant future, maybe during the course of the next couple of quarters, we'll give you more specifics on that. Our enterprise business is growing in a number of directions. And we are primarily focusing on – obviously, we're focusing on highest margin, highest profitability segments. We have vastly deprioritized and in fact discontinued anything that had low margins, lower margin. So, don't look at our enterprise business as compared to some of the undifferentiated enterprise businesses, ours includes high expertise, a lot of manufacturing of our own products, solutions that we don't create and unique IP involved in some of those. So, we are very excited about the enterprise business. Again, lower capital requirement, vastly lower capital requirements and very large size orders coming. I think for now, we are not yet in position, for competitive reasons, we're not yet in position to, kind of dissect the new business that we're gaining, but you should assume that it involves some groundbreaking new areas where we have not done business before.

Great. And maybe turn in a different direction. Can you give us your sense of what you're seeing regionally in terms of demand in different parts of the world? And perhaps maybe a little bit higher level thought on what you're seeing, obviously, good backlog and good orders, but in terms of the economic environment, the demand for your customers?

Sure. Well, I guess sort of generically, if you look – let's start with South America, we've sort of mentioned cellular backhaul world. We're seeing a lot of projects for connecting the unconnected. So, that's a very active market. That theme continues pretty much across most of the rest of the world, except for Western Europe, so that's a pretty strong theme, both the unconnected aspect, as well as the cellular backhaul aspect. We are seeing growth in the broadband where you have direct terminals to homes and schools and so on. And that – we talked about the MEASAT project. We got – obviously have a lot of activity in other places like Indonesia, India certainly is a case in point. And then in Western Europe, Eutelsat is actively deploying broadband. So, we have a whole series of these broadband projects all the way from end users up to schools and communities. In North America, there's a whole series of industrial projects, a lot of connectivity, where in North America, the object is to have more than one path to the broadband services, most of the corporations and users can't afford to be down anymore, especially with cloud services. So, we see a lot of activity in that space.

Great. Also, you talked about the Fusion service offering. Can you give us any sense of how quickly that product line is growing and maybe even what percent of the installed base or some other metric that might be useful and what, sort of impact are you seeing on those plans in terms of the monthly ARPU?

Yes, I guess, well, two parts. One, I think we can in future quarters give you a little more background. We haven't completed our rollout across the U.S. yet. So, I think once we have that, we can give you a better sense of it. And then I think as we look forward, if you look at our service plans, I think you can see the base pricing is a $99 plan. So, certainly, that's skip above most of the plans we sell today in the GEO service. So, we would expect some combination of blending of customers buying that kind of a plan, as well as our standard go-to plans, which are lower priced.

Great. There was a mention on CapEx of obviously, one of the $15 million receivable from Maxar. Can you just remind us, are there any additional payments that you expect throughout the course of this year?

Yes, we expect that in the second quarter we'll continue to receive payments and they've disclosed that in their filing. So, our payments will continue at the same pace through end of June and if for any reason, which we're not anticipating at the moment, the satellite delivery is further delayed, there'll be additional payments beyond June, but we're not expecting that. So, there'll be another $30 million of additional payments – $15 million for the quarter. Yes, $15 million for the next quarter.

Okay. Also, your ESA and electronically steered antenna that aviation antenna, it sounds like you've gotten surprisingly good traction. There haven't been that many announcements of aviation installs. Can you give us a sense of what your expectations are for that product line? And how broadly you're shopping that in front of other airline customers?

Well, certainly, one of the attributes of the aviation world is, it's quite a rigorous certification process. So, actual antennas that go on aircraft will be delayed until we complete that process. But we think what we've done is technologically quite sophisticated. It provides a lot of, I think, very good benefits to an airline that might consider it. So, we hope that as time goes on, we'll see a pickup of that. I think the main thing we've announced is, of course, the antenna we're going to be supplying to Gogo Business Aviation, which is a nice fit for that kind of an aircraft. So, I think we'll continue to get that developed and get it out approved and out to market. And then at which point we got to see how big an opportunity it is.

Great. And final question, I think you mentioned that you had shipped 16,000 core modules for integration into OneWeb terminals. Remind me, you're not assembling the terminal, that's someone else, you're just shipping the core module? And second question, since OneWeb products are now shipping, are you guys seeing any activity in your Indian operations?

Well, okay, on the first part, so the industrial structure that was created was, we build the core module, which any partner of OneWeb can use in whatever aspect of a terminal or a set of services they might create. So, we're just an enabling component and so in that respect, we ship these out to various partners and their partners then make use of them in their applications. And as far as India, I think mainly – we defer to OneWeb to describe their plans there. Obviously, we stand by ready once the services are lit up, but they can, I think, speak more to that.

All right. Great. Thank you very much gentlemen.

Our next question comes from the line of Ric Prentiss with Raymond James.

Just out of the time we got for a few more follow-ups, I want to follow back up on one of Michael's questions. I think your answer alluded to it, but under what or any circumstances would it make sense for EchoStar shareholders, for DISH and EchoStar to recombine? Is there any potential out there, scenario that says that should happen? Is it even a thought?

That is not a topic that we have contemplated and we can discuss here in the call. We do have, as I mentioned earlier, we are not limited with respect to any opportunities in the existing situation we have with DISH. So we have a great working relationship with them. We have not had any issues with respect to, you know the company has not been able to come to an arm's length agreement on any aspect of the opportunities. As I said, we find ourselves in a number of cases where there's mutually beneficial opportunities that seem to have somewhat of a complementary assets to us in many ways. But we have not had any limitations on being able to put those two assets – classes of assets to use in any opportunity. So, we're not hampered by anything at the moment.

Okay. And to follow up on some of Chris' questions. obviously, some concern about global economy out there, potential recessions, enterprise. What are you seeing as far as enterprise? Obviously, the backlog can speak for itself, but any concerns you're hearing from the customer base about economic concerns or purchase orders or timing and trends?

Well, I think nothing specific. Obviously, the customers we talk to are in different positions depending on what part of the world they're in. There are certainly some concerns, especially with enterprise customers, but we do see them proceeding to make decisions perhaps a little bit slower in some cases but they are proceeding. So we're not seeing yet the forecasted effect that people feel is out there in the market.

And I want to also say that at the moment, we're not seeing – we're not exposing ourselves in any sort of – in any material or meaningful way to bad debt. So, our business, our enterprise business, it stands on solid credit ground. We're not using our balance sheet to float other enterprise businesses in some of our manufacturing activities. We actually get paid before even we buy the equipment and materials. So, we are in, we are not exposed to bad debt in any material way, in the enterprise business.

Okay. And last one for me. Any update on the CFO search, as far as candidates, timing, when we could expect someone joining the team?

Ric, I was just joking with my team and I was saying, I love the job so much myself that I just – I might as well not never fill it. But kidding aside, look, the nature of our business has been – first of all, we have been very busy, I have been interviewing a number of candidates. I have not – I have a complete team now and I'm happy with everybody that I have on my team. So, we're not, in anyway, kind of short of leadership here. And CFO is the only open position that I have that is still open. I have been – candidly, part of it has been my own schedule and just lining things up, getting the right candidate, but part of it is that as the nature of our business has been changing, we're doing this shifting towards enterprise, taking a look at the S-band and others, I have been very picky about the profile that's changing, continuously changing and trying to figure out who is the right person to join us. But I do expect that this will not take hopefully too much longer. But we – but again, I wanted to say that as you have seen from our results, from our ability to focus on proper financials and developing the business that we are not in any way limited by lack of a sitting CFO.

Great. Thanks for the follow-up questions.

That concludes today's question-and-answer session. I'd like to turn the call back to Dean Manson for closing remarks.

Okay. Well, thank you, Liz. I think we're ready to bring the meeting to a close. Thank you, everyone, for calling in.

Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.