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Hughes

EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2018

Englewood, CO, February 21, 2019—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2018.

 

Three Months Ended December 31, 2018 Financial Highlights:

  • Consolidated revenues of $531 million.
  • Consolidated net loss from continuing operations of $112 million, consolidated net loss attributable to EchoStar common stock of $112 million, and diluted loss per share of $1.17. Included in these amounts are net losses on investments of $46 million and a non-recurring impairment charge of $65 million. Excluding these items, diluted loss per share would have been $0.01.
  • Consolidated EBITDA of $85 million, including net losses on investments of $46 million and a non-recurring impairment charge of $65 million.  Excluding these items, EBITDA would have been $196 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2018 Financial Highlights:

  • Consolidated revenues of $2.1 billion.
  • Consolidated net loss from continuing operations of $39 million, consolidated net loss attributable to EchoStar common stock of $40 million, and diluted loss per share of $0.42. Included in these amounts are net losses on investments of $12 million and a non-recurring impairment charge of $65 million. Excluding these items, diluted earnings per share would have been $0.38.
  • Consolidated EBITDA of $757 million, including net losses on investments of $12 million and a non-recurring impairment charge of $65 million. Excluding these items, EBITDA would have been $834 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Cash, cash equivalents and current marketable investment securities of $3.2 billion as of December 31, 2018.
  • Approximately 1,361,000 Hughes broadband subscribers as of December 31, 2018.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2018 and 2017:

 

 

For the Three Months
Ended December 31,

 

For the Years
Ended December 31,

 

 

2018

 

2017

 

2018

 

2017

 

 

(In thousands)

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$

444,642

 

 

$

405,775

 

 

$

1,716,528

 

 

$

1,477,918

 

EchoStar Satellite Services

 

81,873

 

 

96,459

 

 

358,058

 

 

392,244

 

Corporate and Other

 

4,146

 

 

3,814

 

 

16,777

 

 

15,346

 

Total

 

$

530,661

 

 

$

506,048

 

 

$

2,091,363

 

 

$

1,885,508

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$

148,337

 

 

$

132,529

 

 

$

601,319

 

 

$

475,222

 

EchoStar Satellite Services

 

69,269

 

 

73,412

 

 

308,058

 

 

315,285

 

Corporate and Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(18,716

)

 

(18,782

)

 

(69,356

)

 

(63,168

)

Equity in earnings (losses) of unconsolidated affiliates, net

 

(3,303

)

 

1,353

 

 

(5,954

)

 

16,973

 

Gains (losses) on investments, net

 

(45,349

)

 

22,789

 

 

(12,178

)

 

55,027

 

 Impairment of long lived assets

 

(65,220

)

 

(4,762

)

 

(65,220

)

 

(4,762

)

Sub-total

 

(132,588

)

 

598

 

 

(152,708

)

 

4,070

 

Total

 

$

85,018

 

 

$

206,539

 

 

$

756,669

 

 

$

794,577

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(111,648

)

 

$

311,759

 

 

$

(38,633

)

 

$

384,980

 

Net income from discontinued operations

 

 

 

2,055

 

 

 

 

8,509

 

Net income (loss)

 

$

(111,648

)

 

$

313,814

 

 

$

(38,633

)

 

$

393,489

 

 

 

 

 

 

 

 

 

 

Expenditures for property and equipment from continuing operations

 

$

139,888

 

 

$

156,239

 

 

$

477,617

 

 

$

566,384

 

 

The following table reconciles GAAP to non-GAAP measurements.

 

 

For the Three Months
Ended December 31,

 

For the Years
Ended December 31,

 

 

2018

 

2017

 

2018

 

2017

 

 

(In thousands)

Net income (loss)

 

$

(111,648

)

 

$

313,814

 

 

$

(38,633

)

 

$

393,489

 

 

 

 

 

 

 

 

 

 

Interest income and expense, net

 

38,158

 

 

46,465

 

 

168,293

 

 

172,621

 

Income tax (benefit) provision, net

 

5,438

 

 

(293,359

)

 

30,673

 

 

(284,286

)

Depreciation and amortization

 

153,620

 

 

142,251

 

 

598,178

 

 

522,190

 

Net income from discontinued operations

 

 

 

(2,055

)

 

 

 

(8,509

)

Net income attributable to noncontrolling interests

 

(550

)

 

(577

)

 

(1,842

)

 

(928

)

EBITDA

 

$

85,018

 

 

$

206,539

 

 

$

756,669

 

 

$

794,577

 

 

Note on Use of Non-GAAP Financial Measures

 

EBITDA is defined as “Net income (loss)” excluding “Interest income and expense, net,” “Income tax provision (benefit), net,” “Depreciation and amortization,” “Net income (loss) from discontinued operations,” and “Net income (loss) attributable to noncontrolling interests.”  EBITDA is not a measure determined in accordance with U.S. GAAP.  EBITDA is 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 U.S. GAAP.  Our management uses this non-GAAP measure as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that this non-GAAP measure provides meaningful supplemental information regarding the underlying operating performance of our business and is appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA is useful to investors because it is 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 December 31, 2018 and 2017 are attached to this press release. Detailed financial data and other information are available in EchoStar’s Annual Report on Form 10-K for the period ended December 31, 2018 filed today with the Securities and Exchange Commission.

 

EchoStar will host its earnings conference call on Thursday, February 21, 2019 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 2185925.

 

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 forwardlooking statements. Although management believes that the expectations reflected in these forwardlooking 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, 2018, 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

Consolidated Balance Sheets

(In thousands, except per share amounts)

 

 

As of December 31,

 

 

2018

 

2017

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

928,306

 

 

$

2,431,456

 

Marketable investment securities, at fair value

 

2,282,152

 

 

814,161

 

Trade accounts receivable and contract assets, net

 

201,096

 

 

196,840

 

Trade accounts receivable - DISH Network

 

14,200

 

 

43,295

 

Inventory

 

75,379

 

 

83,595

 

Prepaids and deposits

 

61,177

 

 

54,533

 

Other current assets

 

18,539

 

 

91,671

 

Total current assets

 

3,580,849

 

 

3,715,551

 

Noncurrent assets:

 

 

 

 

Property and equipment, net

 

3,414,908

 

 

3,465,471

 

Regulatory authorizations, net

 

495,654

 

 

536,936

 

Goodwill

 

504,173

 

 

504,173

 

Other intangible assets, net

 

44,231

 

 

58,955

 

Investments in unconsolidated entities

 

262,473

 

 

161,427

 

Other receivables - DISH Network

 

95,114

 

 

92,687

 

Other noncurrent assets, net

 

263,892

 

 

214,814

 

Total noncurrent assets

 

5,080,445

 

 

5,034,463

 

Total assets

 

$

8,661,294

 

 

$

8,750,014

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$

121,437

 

 

$

108,406

 

Trade accounts payable - DISH Network

 

1,698

 

 

4,753

 

Current portion of long-term debt and capital lease obligations

 

959,577

 

 

40,631

 

Contract liabilities

 

72,284

 

 

65,959

 

Accrued interest

 

47,416

 

 

47,616

 

Accrued compensation

 

54,242

 

 

47,756

 

Accrued taxes

 

16,013

 

 

16,122

 

Accrued expenses and other

 

72,470

 

 

82,647

 

Total current liabilities

 

1,345,137

 

 

413,890

 

Noncurrent liabilities:

 

 

 

 

Long-term debt and capital lease obligations, net

 

2,573,204

 

 

3,594,213

 

Deferred tax liabilities, net

 

465,933

 

 

436,023

 

Other noncurrent liabilities

 

121,546

 

 

128,503

 

Total noncurrent liabilities

 

3,160,683

 

 

4,158,739

 

Total liabilities

 

4,505,820

 

 

4,572,629

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of December 31, 2018 and 2017

 

 

 

 

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, 54,142,566 shares issued and 47,657,645 shares outstanding at December 31, 2018 and 53,663,859 shares issued and 48,131,541 shares outstanding at December 31, 2017

 

54

 

 

54

 

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December 31, 2018 and 2017

 

48

 

 

48

 

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2018 and 2017

 

 

 

 

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2018 and 2017

 

 

 

 

Additional paid-in capital

 

3,702,522

 

 

3,669,461

 

Accumulated other comprehensive loss

 

(125,100

)

 

(130,154

)

Accumulated earnings

 

694,129

 

 

721,316

 

Treasury stock, at cost

 

(131,454

)

 

(98,162

)

Total EchoStar Corporation stockholders’ equity

 

4,140,199

 

 

4,162,563

 

Other noncontrolling interests

 

15,275

 

 

14,822

 

Total stockholders’ equity

 

4,155,474

 

 

4,177,385

 

Total liabilities and stockholders’ equity

 

$

8,661,294

 

 

$

8,750,014

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(In thousands, except per share amounts)

 

 

 

For the years ended December 31,

 

 

2018

 

2017

 

2016

Revenue:

 

 

 

 

 

 

Services and other revenue - DISH Network

 

$

378,694

 

 

$

445,698

 

 

$

463,442

 

Services and other revenue - other

 

1,507,259

 

 

1,200,321

 

 

1,100,828

 

Equipment revenue

 

205,410

 

 

239,489

 

 

246,196

 

Total revenue

 

2,091,363

 

 

1,885,508

 

 

1,810,466

 

Costs and expenses:

 

 

 

 

 

 

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

 

604,305

 

 

563,346

 

 

536,568

 

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

 

176,600

 

 

195,151

 

 

188,617

 

Selling, general and administrative expenses

 

436,247

 

 

366,007

 

 

325,044

 

Research and development expenses

 

27,570

 

 

31,745

 

 

31,170

 

Depreciation and amortization

 

598,178

 

 

522,190

 

 

432,904

 

Impairment of long-lived assets

 

65,220

 

 

10,762

 

 

 

Total costs and expenses

 

1,908,120

 

 

1,689,201

 

 

1,514,303

 

Operating income

 

183,243

 

 

196,307

 

 

296,163

 

Other income (expense):

 

 

 

 

 

 

Interest income

 

80,275

 

 

44,619

 

 

21,244

 

Interest expense, net of amounts capitalized

 

(248,568

)

 

(217,240

)

 

(123,481

)

Gains (losses) on investments, net

 

(12,207

)

 

53,453

 

 

9,767

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(5,954

)

 

16,973

 

 

10,802

 

Other, net

 

(4,749

)

 

6,582

 

 

2,131

 

Total other income (expense), net

 

(191,203

)

 

(95,613

)

 

(79,537

)

Income (loss) from continuing operations before income taxes

 

(7,960

)

 

100,694

 

 

216,626

 

Income tax benefit (provision), net

 

(30,673

)

 

284,286

 

 

(80,254

)

Net income (loss) from continuing operations

 

(38,633

)

 

384,980

 

 

136,372

 

Net income from discontinued operations

 

 

 

8,509

 

 

44,320

 

Net income (loss)

 

(38,633

)

 

393,489

 

 

180,692

 

Less: Net income attributable to noncontrolling interests

 

1,842

 

 

928

 

 

762

 

Net income (loss) attributable to EchoStar Corporation

 

(40,475

)

 

392,561

 

 

179,930

 

Less: Net loss attributable to Hughes Retail Preferred Tracking Stock

 

 

 

(1,209

)

 

(1,743

)

Net income (loss) attributable to EchoStar Corporation common stock

 

$

(40,475

)

 

$

393,770

 

 

$

181,673

 

 

 

 

 

 

 

 

Earnings per share - Class A and B common stock:

 

 

 

 

 

 

Basic earnings (loss) from continuing operations per share

 

$

(0.42

)

 

$

4.04

 

 

$

1.46

 

Total basic earnings (loss) per share

 

$

(0.42

)

 

$

4.13

 

 

$

1.94

 

Diluted earnings (loss) from continuing operations per share

 

$

(0.42

)

 

$

3.98

 

 

$

1.45

 

Total diluted earnings (loss) per share

 

$

(0.42

)

 

$

4.07

 

 

$

1.92

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

 

 

For the years ended December 31,

 

 

2018

 

2017

 

2016

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(38,633

)

 

$

393,489

 

 

$

180,692

 

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

 

 

 

 

 

 

Depreciation and amortization

 

598,178

 

 

533,849

 

 

495,068

 

Impairment of long-lived assets

 

65,220

 

 

10,762

 

 

 

Equity in earnings of unconsolidated affiliates, net

 

6,037

 

 

(15,814

)

 

(13,310

)

Amortization of debt issuance costs

 

7,923

 

 

7,378

 

 

6,551

 

Gains and losses on investments, net

 

12,109

 

 

(53,453

)

 

(9,767

)

Stock-based compensation

 

9,990

 

 

10,103

 

 

15,234

 

Deferred tax provision (benefit)

 

26,327

 

 

(288,577

)

 

98,148

 

Dividends received from unconsolidated entities

 

10,000

 

 

19,000

 

 

15,000

 

Proceeds from sale of trading securities

 

 

 

8,922

 

 

7,140

 

Changes in current assets and current liabilities, net:

 

 

 

 

 

 

Trade accounts receivable, net

 

(17,842

)

 

421

 

 

(26,942

)

Trade accounts receivable - DISH Network

 

29,188

 

 

235,227

 

 

(1,456

)

Inventory

 

5,650

 

 

(19,291

)

 

(4,814

)

Other current assets

 

(16,261

)

 

(15,352

)

 

2,263

 

Trade accounts payable

 

9,562

 

 

(78,419

)

 

(24,571

)

Trade accounts payable - DISH Network

 

(3,055

)

 

731

 

 

(19,650

)

Accrued expenses and other

 

23,105

 

 

11,993

 

 

55,998

 

Changes in noncurrent assets and noncurrent liabilities, net

 

(5,070

)

 

(36,975

)

 

9,459

 

Other, net

 

12,094

 

 

2,898

 

 

18,300

 

Net cash flows from operating activities

 

734,522

 

 

726,892

 

 

803,343

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of marketable investment securities

 

(2,973,254

)

 

(855,717

)

 

(921,247

)

Sales and maturities of marketable investment securities

 

1,498,463

 

 

580,235

 

 

1,009,310

 

Expenditures for property and equipment

 

(555,141

)

 

(583,211

)

 

(722,341

)

Refunds and other receipts related to property and equipment

 

77,524

 

 

4,311

 

 

24,087

 

Sale of investment in unconsolidated entity

 

1,558

 

 

17,781

 

 

 

Expenditures for externally marketed software

 

(31,639

)

 

(31,331

)

 

(23,252

)

Investments in unconsolidated entities

 

(115,991

)

 

 

 

(1,636

)

Other, net

 

 

 

 

 

2,880

 

Net cash flows from investing activities

 

(2,098,480

)

 

(867,932

)

 

(632,199

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

1,500,000

 

Payments of debt issuance costs

 

 

 

(414

)

 

(7,097

)

Repurchase of the 2019 Senior Secured Notes (Note 12)

 

(70,173

)

 

 

 

 

Purchase of treasury shares (Note 14)

 

(33,292

)

 

 

 

 

Repayment of debt and capital lease obligations

 

(41,019

)

 

(37,670

)

 

(40,364

)

Net proceeds from Class A common stock options exercised

 

4,424

 

 

35,536

 

 

13,065

 

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

 

9,368

 

 

8,758

 

 

14,367

 

Repayment of in-orbit incentive obligations

 

(5,350

)

 

(5,487

)

 

(5,499

)

Cash exchanged for Tracking Stock (Note 1)

 

 

 

(651

)

 

 

Other, net

 

(521

)

 

 

 

1,217

 

Net cash flows from financing activities

 

(136,563

)

 

72

 

 

1,475,689

 

Effect of exchange rates on cash and cash equivalents

 

(2,233

)

 

1,351

 

 

138

 

Net increase (decrease) in cash and cash equivalents

 

(1,502,754

)

 

(139,617

)

 

1,646,971

 

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

 

2,432,249

 

 

2,571,866

 

 

924,895

 

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

 

$

929,495

 

 

$

2,432,249

 

 

$

2,571,866

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

$

240,596

 

 

$

207,617

 

 

$

78,312

 

Cash paid for income taxes

 

$

5,209

 

 

$

11,033

 

 

$

11,700