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EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2020

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Englewood, CO, November 5, 2020—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2020.

Three Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $473.5 million.
  • Net income from continuing operations of $23.3 million, consolidated net income attributable to EchoStar common stock of $25.4 million, and diluted earnings per share of $0.26.
  • Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Nine Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $1,398.6 million.
  • Net loss from continuing operations of $49.3 million, consolidated net loss attributable to EchoStar common stock of $40.3 million, and diluted loss per share of $(0.41).
  • Consolidated Adjusted EBITDA of $476.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“We had another outstanding quarter,” commented Michael Dugan, CEO and President of EchoStar.  “We increased our consumer subscriber base by approximately 38,000, driven by our international markets, and grew our Net income and Adjusted EBITDA from the same period last year.  The continued growth in demand for our service demonstrates the importance of our networks and services for businesses and families everywhere.  We will continue to focus on the needs of our customers as connectivity becomes a more vital part of business, entertainment, and communications.”

Three Months Ended September 30, 2020 - Additional Information:

  • Consolidated revenue was up $1.2 million year over year including an estimated negative foreign exchange impact of $10.9 million.
  • Adjusted EBITDA increased 9% or $14.3 million year over year.
    • Hughes segment Adjusted EBITDA increased $13.2 million year over year.  The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service.
    • ESS segment Adjusted EBITDA increased by $0.5 million year over year.
    • Corporate and Other segment Adjusted EBITDA increased by $0.7 million.  The increase was primarily driven by lower equity losses in unconsolidated affiliates of $1.3 million compared to the same period last year.
  • Net income from continuing operations was $23.3 million, an increase of $46.4 million from last year.  The change was primarily due to higher operating income of $10.9 million, improvement in foreign currency transactions, net, of $21.8 million, higher gains on investments, net, of $6.7 million, and lower income tax provision of $2.1 million.
  • Hughes broadband subscribers are approximately 1,580,000 as of September 30, 2020 including approximately 364,000 subscribers in Latin America.
  • For the three months ended September 30, 2020, approximately 71% of Hughes segment revenue was attributable to our consumer customers with approximately 29% attributable to our enterprise customers.
  • Cash, cash equivalents and marketable investment securities were $2.5 billion as of September 30, 2020.

 

Set forth below is a table highlighting certain of EchoStar’s segment results three and nine months ended September 30, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$466,762 

 

 

 

$463,735 

 

 

 

$1,378,416

 

 

 

$1,360,919

 

 

EchoStar Satellite Services

 

4,402 

 

 

4,098 

 

 

13,233 

 

 

11,873 

 

Corporate and Other

 

2,338 

 

 

4,429 

 

 

6,985 

 

 

14,283 

 

Total revenue

 

$473,502

 

 

 

$472,262

 

 

 

$1,398,634

 

 

 

$1,387,075

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$186,458

 

 

 

$173,298

 

 

 

$534,955

 

 

 

$490,152

 

 

EchoStar Satellite Services

 

2,274 

 

 

1,791 

 

 

5,847 

 

 

5,006 

 

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(21,572)

 

 

(20,981)

 

 

(63,948)

 

 

(58,769)

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(504)

 

 

(1,782)

 

 

(660)

 

 

(9,507)

 

Total Corporate & Other

 

(22,076)

 

 

(22,763)

 

 

(64,608)

 

 

(68,276)

 

Total Adjusted EBITDA

 

$166,656

 

 

 

$152,326

 

 

 

$476,194

 

 

 

$426,882

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property and equipment

 

$98,137

 

 

 

$95,155

 

 

 

$295,041

 

 

 

$314,351

 

 

 

Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income (loss)

 

$23,273

 

 

 

$(21,106)

 

 

 

(49,307)

 

 

(11,158)

 

Interest income, net

 

(7,364)

 

 

(17,175)

 

 

(33,707)

 

 

(64,817)

 

Interest expense, net of amounts capitalized

 

37,967 

 

 

49,865 

 

 

112,458 

 

 

156,813 

 

Income tax provision (benefit), net

 

2,950 

 

 

5,016 

 

 

6,309 

 

 

12,607 

 

Depreciation and amortization

 

129,822 

 

 

122,374 

 

 

392,077 

 

 

361,619 

 

Net loss (income) from discontinued operations

 

— 

 

 

(2,008)

 

 

— 

 

 

(46,223)

 

Net loss (income) attributable to non-controlling interests

 

2,167 

 

 

2,797 

 

 

9,040 

 

 

1,359 

 

EBITDA

 

188,815 

 

 

139,763 

 

 

436,870 

 

 

410,200 

 

(Gains) losses on investments, net

 

(14,998)

 

 

(8,295)

 

 

37,764 

 

 

(28,087)

 

Litigation Expense

 

— 

 

 

1,824 

 

 

— 

 

 

26,328 

 

License fee dispute - India, net of non-controlling interests

 

(480)

 

 

3,940 

 

 

(1,043)

 

 

3,940 

 

Foreign currency transaction (gains) losses, net

 

(6,681)

 

 

15,094 

 

 

2,603 

 

 

14,501 

 

Adjusted EBITDA

 

$166,656

 

 

 

$152,326

 

 

 

$476,194

 

 

 

$426,882

 

 

                                 

 

Note on Use of Non-GAAP Financial Measures

EBITDA is defined as “Net income (loss)” excluding “Interest income, net,” Interest expense, net of amounts capitalized,” “Income tax benefit (provision), net,” “Depreciation and amortization,” “Net income (loss) from discontinued operations,” and “Net income (loss) attributable to non-controlling interests.” 

Adjusted EBITDA is defined as EBITDA excluding “Gains and losses on investments, net,” “Foreign currency transaction gains (losses), net,” and other non-recurring or non-operational items.  EBITDA and Adjusted EBITDA are not measures determined in accordance with US GAAP. EBITDA and Adjusted EBITDA are reconciled to “Net income (loss)” in the table above and should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with US GAAP. Our management uses EBITDA and Adjusted EBITDA as measures of our operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that these non-GAAP measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they are frequently used by securities analysts, investors, and other interested parties to evaluate the performance of companies in our industry.

The consolidated financial statements of EchoStar for the periods ended September 30, 2020 and 2019 are attached to this press release. Detailed financial data and other information are available in EchoStar’s Quarterly Report on Form 10-Q for the period ended September 30, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Thursday, November 5, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (US) and (716) 247-5178 (International), Conference ID 8263356.  The webcast will be available on EchoStar’s investor relations website at www.echostar.com.

About EchoStar Corporation

EchoStar Corporation (NASDAQ:  SATS) is a premier global provider of satellite communications solutions.  Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services business segments.

Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “plans,” and similar expressions and the use of future dates are intended to identify forward‑looking statements. Although management believes that the expectations reflected in these forward‑looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no responsibility for the accuracy of forward-looking statements or information or for updating forward-looking information or statements. These statements are subject to certain risks, uncertainties, and assumptions. See “Risk Factors” in EchoStar’s Annual Report on Form 10-K for the period ended December 31, 2019 and Quarterly Report on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission and in the other documents EchoStar files with the Securities and Exchange Commission from time to time.

 

ECHOSTAR CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)

 

 

As of

 

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$555,550

 

 

 

$1,519,431

 

 

Marketable investment securities

 

1,950,804 

 

 

940,623 

 

Trade accounts receivable and contract assets, net

 

190,950 

 

 

196,629 

 

Other current assets, net

 

192,724 

 

 

179,531 

 

Total current assets

 

2,890,028 

 

 

2,836,214 

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

2,372,594 

 

 

2,528,738 

 

Operating lease right-of-use assets

 

129,073 

 

 

114,042 

 

Goodwill

 

508,660 

 

 

506,953 

 

Regulatory authorizations, net

 

475,824 

 

 

478,598 

 

Other intangible assets, net

 

20,550 

 

 

29,507 

 

Other investments, net

 

284,238 

 

 

325,405 

 

Other non-current assets, net

 

344,569 

 

 

334,841 

 

Total non-current assets

 

4,135,508 

 

 

4,318,084 

 

Total assets

 

$7,025,536

 

 

 

$7,154,298

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$111,099

 

 

 

$124,080

 

 

Current portion of long-term debt, net

 

897,303 

 

 

— 

 

Contract liabilities

 

89,622 

 

 

101,060 

 

Accrued expenses and other current liabilities

 

276,703 

 

 

270,879 

 

Total current liabilities

 

1,374,727 

 

 

496,019 

 

Non-current liabilities:

 

 

 

 

Long-term debt, net

 

1,495,078 

 

 

2,389,168 

 

Deferred tax liabilities, net

 

352,948 

 

 

351,692 

 

Operating lease liabilities

 

115,376 

 

 

96,941 

 

Other non-current liabilities

 

74,271 

 

 

74,925 

 

Total non-current liabilities

 

2,037,673 

 

 

2,912,726 

 

Total liabilities

 

3,412,400 

 

 

3,408,745 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

 

— 

 

 

— 

 

Common stock, $0.001 par value, 4,000,000,000 shares authorized:

 

 

 

 

Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 57,140,432 shares issued and 50,458,512 shares outstanding at September 30, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 2019

 

57 

 

 

57 

 

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both September 30, 2020 and December 31, 2019

 

48 

 

 

48 

 

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

 

— 

 

 

— 

 

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

 

— 

 

 

— 

 

Additional paid-in capital

 

3,317,868 

 

 

3,290,483 

 

Accumulated other comprehensive income (loss)

 

(209,538)

 

 

(122,138)

 

Accumulated earnings (losses)

 

583,474 

 

 

632,809 

 

Treasury stock, at cost

 

(137,347)

 

 

(131,454)

 

Total EchoStar Corporation stockholders’ equity

 

3,554,562 

 

 

3,669,805 

 

Non-controlling interests

 

58,574 

 

 

75,748 

 

Total stockholders’ equity

 

3,613,136 

 

 

3,745,553 

 

Total liabilities and stockholders’ equity

 

$7,025,536

 

 

 

$7,154,298

 

 

                 

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

Services and other revenue

 

$426,532

 

 

 

$406,537

 

 

 

$1,251,932

 

 

 

$1,211,991

 

 

Equipment revenue

 

46,970 

 

 

65,725 

 

 

146,702 

 

 

175,084 

 

Total revenue

 

473,502 

 

 

472,262 

 

 

1,398,634 

 

 

1,387,075 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales - services and other (exclusive of depreciation and amortization)

 

146,577 

 

 

143,842 

 

 

432,848 

 

 

429,869 

 

Cost of sales - equipment (exclusive of depreciation and amortization)

 

37,079 

 

 

51,188 

 

 

115,529 

 

 

142,744 

 

Selling, general and administrative expenses

 

115,358 

 

 

122,629 

 

 

354,437 

 

 

383,952 

 

Research and development expenses

 

7,676 

 

 

6,136 

 

 

21,378 

 

 

19,411 

 

Depreciation and amortization

 

129,822 

 

 

122,374 

 

 

392,077 

 

 

361,619 

 

Total costs and expenses

 

436,512 

 

 

446,169 

 

 

1,316,269 

 

 

1,337,595 

 

Operating income (loss)

 

36,990 

 

 

26,093 

 

 

82,365 

 

 

49,480 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income, net

 

7,364 

 

 

17,175 

 

 

33,707 

 

 

64,817 

 

Interest expense, net of amounts capitalized

 

(37,967)

 

 

(49,865)

 

 

(112,458)

 

 

(156,813)

 

Gains (losses) on investments, net

 

14,998 

 

 

8,295 

 

 

(37,764)

 

 

28,087 

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(2,134)

 

 

(3,209)

 

 

(5,866)

 

 

(14,317)

 

Foreign currency transaction gains (losses), net

 

6,681 

 

 

(15,094)

 

 

(2,603)

 

 

(14,501)

 

Other, net

 

291 

 

 

(1,493)

 

 

(379)

 

 

(1,527)

 

Total other income (expense), net

 

(10,767)

 

 

(44,191)

 

 

(125,363)

 

 

(94,254)

 

Income (loss) from continuing operations before income taxes

 

26,223 

 

 

(18,098)

 

 

(42,998)

 

 

(44,774)

 

Income tax benefit (provision), net

 

(2,950)

 

 

(5,016)

 

 

(6,309)

 

 

(12,607)

 

Net income (loss) from continuing operations

 

23,273 

 

 

(23,114)

 

 

(49,307)

 

 

(57,381)

 

Net income (loss) from discontinued operations

 

— 

 

 

2,008 

 

 

— 

 

 

46,223 

 

Net income (loss)

 

23,273 

 

 

(21,106)

 

 

(49,307)

 

 

(11,158)

 

Less: Net loss (income) attributable to non-controlling interests

 

2,167 

 

 

2,797 

 

 

9,040 

 

 

1,359 

 

Net income (loss) attributable to EchoStar Corporation common stock

 

$25,440

 

 

 

$(18,309)

 

 

 

$(40,267)

 

 

 

(9,799)

 

 

 

 

 

 

 

 

 

 

Earnings (losses) per share - Class A and B common stock:

 

 

 

 

 

 

 

 

Basic and diluted earnings (losses) from continuing operations per share

 

$0.26

 

 

 

$(0.21)

 

 

 

$(0.41)

 

 

 

$(0.58)

 

 

Total basic and diluted earnings (losses) per share

 

$0.26

 

 

 

$(0.19)

 

 

 

$(0.41)

 

 

 

$(0.10)

 

 

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)

 

 

For the nine months ended
September 30,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$(49,307)

 

 

 

$(11,158)

 

 

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

 

 

 

 

Depreciation and amortization

 

392,077 

 

 

459,054 

 

Losses (gains) on investments, net

 

37,764 

 

 

(28,087)

 

Equity in losses (earnings) of unconsolidated affiliates, net

 

5,866 

 

 

14,317 

 

Foreign currency transaction losses (gains), net

 

2,603 

 

 

14,501 

 

Deferred tax provision (benefit), net

 

4,474 

 

 

22,949 

 

Stock-based compensation

 

6,887 

 

 

7,120 

 

Amortization of debt issuance costs

 

3,212 

 

 

4,882 

 

Dividends received from unconsolidated affiliates

 

— 

 

 

2,716 

 

Other, net

 

(9,145)

 

 

9,617 

 

Changes in assets and liabilities, net:

 

 

 

 

Trade accounts receivable and contract assets, net

 

(9,157)

 

 

(5,439)

 

Other current assets, net

 

(21,090)

 

 

(42,140)

 

Trade accounts payable

 

(17,824)

 

 

18,180 

 

Contract liabilities

 

(11,438)

 

 

37,273 

 

Accrued expenses and other current liabilities

 

29,155 

 

 

27,972 

 

Non-current assets and non-current liabilities, net

 

1,325 

 

 

1,303 

 

Net cash flows from operating activities

 

365,402 

 

 

533,060 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investment securities

 

(2,234,671)

 

 

(655,265)

 

Sales and maturities of marketable investment securities

 

1,231,790 

 

 

1,988,078 

 

Expenditures for property and equipment

 

(295,041)

 

 

(314,861)

 

Expenditures for externally marketed software

 

(27,824)

 

 

(21,364)

 

Purchase of other investments

 

(5,500)

 

 

— 

 

Investments in unconsolidated affiliates

 

— 

 

 

(7,503)

 

Dividend received from unconsolidated affiliate

 

— 

 

 

2,284 

 

Net cash flows from investing activities

 

(1,331,246)

 

 

991,369 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Repurchase and maturity of the 2019 Senior Secured Notes

 

— 

 

 

(920,923)

 

Payment of finance lease obligations

 

(606)

 

 

(29,135)

 

Payment of in-orbit incentive obligations

 

(1,268)

 

 

(5,269)

 

Net proceeds from Class A common stock options exercised

 

983 

 

 

64,143 

 

Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan

 

8,066 

 

 

7,724 

 

Treasury share purchase

 

(5,893)

 

 

— 

 

Contribution by non-controlling interest holder

 

14,268 

 

 

— 

 

Purchase of non-controlling interest

 

— 

 

 

(7,313)

 

Other, net

 

998 

 

 

758 

 

Net cash flows from financing activities

 

16,548 

 

 

(890,015)

 

 

 

 

 

 

Effect of exchange rates on cash and cash equivalents

 

(8,348)

 

 

(411)

 

Net increase (decrease) in cash and cash equivalents

 

(957,644)

 

 

634,003 

 

Cash and cash equivalents, including restricted amounts, beginning of period

 

1,521,889 

 

 

929,495 

 

Cash and cash equivalents, including restricted amounts, end of period

 

$564,245

 

 

 

$1,563,498