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EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2020

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Englewood, CO, February 23, 2021—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2020.

Three Months Ended December 31, 2020 Financial Highlights:

  • Consolidated revenues of $489.3 million.
  • Net loss from continuing operations of $2.6 million, consolidated net income attributable to EchoStar common stock of $0.1 million, and diluted earnings per share of $0.01.
  • Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2020 Financial Highlights:

  • Consolidated revenues of $1,887.9 million.
  • Net loss from continuing operations of $51.9 million, consolidated net loss attributable to EchoStar common stock of $40.2 million, and diluted loss per share of $(0.41).
  • Consolidated Adjusted EBITDA of $642.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“2020 will go down in the history books as one of the most challenging on record, but it demonstrated the value of our service to businesses and families and brought out the very best of the EchoStar team,” commented Michael Dugan, CEO and President of EchoStar.  “Thanks to their efforts and accomplishments in every market sector, we delivered solid financial results and grew revenue, net income, and Adjusted EBITDA over 2019. We remain excited about our position in the industry and our ability to grow as the demand for connectivity continues to increase.”

Three Months Ended December 31, 2020 - Additional Information:

  • Consolidated revenue was down $9.7 million year over year primarily driven by lower equipment sales as well as an estimated negative foreign exchange impact of $10.3 million.
  • Adjusted EBITDA increased 7.0% or $10.8 million year over year.
    • Hughes segment Adjusted EBITDA increased $11.7 million year over year.  The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service and lower sales and marketing spend.
    • ESS segment Adjusted EBITDA was flat year over year.
    • Corporate and Other segment Adjusted EBITDA decreased by $0.9 million year over year.  The decrease was primarily due to higher spend on corporate development projects.
  • Net loss from continuing operations was $2.6 million, an improvement of $53.7 million from last year.  The change was primarily due to higher operating income of $6.5 million, lower net interest expense of $47.5 million driven primarily by $58.5 million of interest expense accrued in the fourth quarter of 2019 related to our license fee dispute with the government of India, improvement in foreign currency transactions, net, of $5.7 million, and higher gains on investments, net, of $5.6 million.  This was partially offset by higher income tax provision, net, of $9.9 million.
  • Total Hughes broadband subscribers are approximately 1,564,000 as of December 31, 2020.  Subscribers in the US decreased by 27,000 to approximately 1,189,000.  In Latin America, subscribers increased by 11,000 to approximately 375,000.
  • Based on an updated schedule from Maxar, the Jupiter 3 satellite is expected to launch in the second half of 2022.  In December 2020, we contracted for the launch of the satellite.
  • For the three months ended December 31, 2020, approximately 69% of Hughes segment revenue was attributable to our consumer customers with approximately 31% attributable to our enterprise customers.
  • Cash, cash equivalents and current marketable investment securities were $2.5 billion as of December 31, 2020.
  • In December 2020, we purchased 1,708,907 shares of our Class A common stock in the open market.  From January 1, 2021 through February 11, 2021, we purchased 2,851,841 shares of our Class A common stock in the open market.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$482,418

 

 

 

$491,823

 

 

 

$1,860,834

 

 

 

$1,852,742

 

 

EchoStar Satellite Services

 

4,165 

 

 

4,384 

 

 

17,398 

 

 

16,257 

 

Corporate and Other

 

2,690 

 

 

2,799 

 

 

9,675 

 

 

17,082 

 

Total revenue

 

$489,273

 

 

 

$499,006

 

 

 

$1,887,907

 

 

 

$1,886,081

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$188,389

 

 

 

$176,738

 

 

 

$723,343

 

 

 

$666,890

 

 

EchoStar Satellite Services

 

2,026 

 

 

1,988 

 

 

7,873 

 

 

6,994 

 

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(23,920)

 

 

(23,090)

 

 

(87,867)

 

 

(81,859)

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

226 

 

 

250 

 

 

(434)

 

 

(9,257)

 

Total Corporate & Other

 

(23,694)

 

 

(22,840)

 

 

(88,301)

 

 

(91,116)

 

Total Adjusted EBITDA

 

$166,721

 

 

 

$155,886

 

 

 

$642,915

 

 

 

$582,768

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property and equipment

 

$113,757

 

 

 

$103,723

 

 

 

$408,798

 

 

 

$418,074

 

 

 

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

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(2,597)

 

 

 

$(63,094)

 

 

 

$(51,904)

 

 

 

$(74,252)

 

 

Interest income, net

 

(6,275)

 

 

(17,535)

 

 

(39,982)

 

 

(82,352)

 

Interest expense, net of amounts capitalized

 

35,469 

 

 

94,203 

 

 

147,927 

 

 

251,016 

 

Income tax provision (benefit), net

 

17,760 

 

 

7,882 

 

 

24,069 

 

 

20,488 

 

Depreciation and amortization

 

132,934 

 

 

129,146 

 

 

525,011 

 

 

490,765 

 

Net (income) loss from discontinued operations

 

— 

 

 

6,821 

 

 

— 

 

 

(39,401)

 

Net (income) loss attributable to non-controlling interests

 

2,714 

 

 

9,976 

 

 

11,754 

 

 

11,335 

 

EBITDA

 

180,005 

 

 

167,399 

 

 

616,875 

 

 

577,599 

 

(Gains) losses on investments, net

 

(6,458)

 

 

(825)

 

 

31,306 

 

 

(28,912)

 

Impairment of long-lived assets

 

1,685 

 

 

— 

 

 

1,685 

 

 

— 

 

Litigation expense

 

— 

 

 

(627)

 

 

— 

 

 

25,701 

 

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

 

107 

 

 

(7,150)

 

 

(936)

 

 

(3,210)

 

Foreign currency transaction (gains) losses, net

 

(8,618)

 

 

(2,911)

 

 

(6,015)

 

 

11,590 

 

Adjusted EBITDA

 

$166,721

 

 

 

$155,886

 

 

 

$642,915

 

 

 

$582,768

 

 

 

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 December 31, 2020 and 2019 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, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Tuesday, February 23, 2021 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 9174397.  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, 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 December 31,

 

 

2020

 

2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$896,005

 

 

 

$1,519,431

 

 

Marketable investment securities

 

1,638,271 

 

 

940,623 

 

Trade accounts receivable and contract assets, net

 

183,989 

 

 

196,629 

 

Other current assets, net

 

189,821 

 

 

179,531 

 

Total current assets

 

2,908,086 

 

 

2,836,214 

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

2,390,313 

 

 

2,528,738 

 

Operating lease right-of-use assets

 

128,303 

 

 

114,042 

 

Goodwill

 

511,597 

 

 

506,953 

 

Regulatory authorizations, net

 

478,762 

 

 

478,598 

 

Other intangible assets, net

 

18,433 

 

 

29,507 

 

Other investments, net

 

284,937 

 

 

325,405 

 

Other non-current assets, net

 

352,921 

 

 

334,841 

 

Total non-current assets

 

4,165,266 

 

 

4,318,084 

 

Total assets

 

$7,073,352

 

 

 

$7,154,298

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$122,366

 

 

 

$124,080

 

 

Current portion of long-term debt, net

 

898,237 

 

 

— 

 

Contract liabilities

 

104,569 

 

 

101,060 

 

Accrued expenses and other current liabilities

 

299,999 

 

 

270,879 

 

Total current liabilities

 

1,425,171 

 

 

496,019 

 

Non-current liabilities:

 

 

 

 

Long-term debt, net

 

1,495,256 

 

 

2,389,168 

 

Deferred tax liabilities, net

 

359,896 

 

 

351,692 

 

Operating lease liabilities

 

114,886 

 

 

96,941 

 

Other non-current liabilities

 

70,893 

 

 

74,925 

 

Total non-current liabilities

 

2,040,931 

 

 

2,912,726 

 

Total liabilities

 

3,466,102 

 

 

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 December 31, 2020 and 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,  57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 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 December 31, 2020 and 2019

 

48 

 

 

48 

 

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

 

— 

 

 

— 

 

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

 

— 

 

 

— 

 

Additional paid-in capital

 

3,321,426 

 

 

3,290,483 

 

Accumulated other comprehensive income (loss)

 

(187,876)

 

 

(122,138)

 

Accumulated earnings (losses)

 

583,591 

 

 

632,809 

 

Treasury stock, at cost

 

(174,912)

 

 

(131,454)

 

Total EchoStar Corporation stockholders' equity

 

3,542,334 

 

 

3,669,805 

 

Non-controlling interests

 

64,916 

 

 

75,748 

 

Total stockholders' equity

 

3,607,250 

 

 

3,745,553 

 

Total liabilities and stockholders' equity

 

$7,073,352

 

 

 

$7,154,298

 

 

                 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

 

 

For the years ended December 31,

 

 

2020

 

2019

 

2018

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

Services and other revenue

 

$1,682,304

 

 

 

$1,619,271

 

 

 

$1,557,228

 

 

Equipment revenue

 

205,603 

 

 

266,810 

 

 

205,410 

 

Total revenue

 

1,887,907 

 

 

1,886,081 

 

 

1,762,638 

 

Costs and expenses:

 

 

 

 

 

 

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

 

577,943 

 

 

561,353 

 

 

563,907 

 

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

 

166,435 

 

 

226,002 

 

 

176,600 

 

Selling, general and administrative expenses

 

474,912 

 

 

509,145 

 

 

436,088 

 

Research and development expenses

 

29,448 

 

 

25,739 

 

 

27,570 

 

Depreciation and amortization

 

525,011 

 

 

490,765 

 

 

457,116 

 

Impairment of long-lived assets

 

1,685 

 

 

— 

 

 

65,220 

 

Total costs and expenses

 

1,775,434 

 

 

1,813,004 

 

 

1,726,501 

 

Operating income (loss)

 

112,473 

 

 

73,077 

 

 

36,137 

 

Other income (expense):

 

 

 

 

 

 

Interest income, net

 

39,982 

 

 

82,352 

 

 

80,275 

 

Interest expense, net of amounts capitalized

 

(147,927)

 

 

(251,016)

 

 

(219,288)

 

Gains (losses) on investments, net

 

(31,306)

 

 

28,912 

 

 

(12,622)

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(7,267)

 

 

(14,734)

 

 

(5,954)

 

Foreign currency transaction gains (losses), net

 

6,015 

 

 

(11,590)

 

 

(15,583)

 

Other, net

 

195 

 

 

(166)

 

 

11,249 

 

Total other income (expense), net

 

(140,308)

 

 

(166,242)

 

 

(161,923)

 

Income (loss) from continuing operations before income taxes

 

(27,835)

 

 

(93,165)

 

 

(125,786)

 

Income tax benefit (provision), net

 

(24,069)

 

 

(20,488)

 

 

(6,576)

 

Net income (loss) from continuing operations

 

(51,904)

 

 

(113,653)

 

 

(132,362)

 

Net income (loss) from discontinued operations

 

— 

 

 

39,401 

 

 

93,729 

 

Net income (loss)

 

(51,904)

 

 

(74,252)

 

 

(38,633)

 

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

 

11,754 

 

 

11,335 

 

 

(1,842)

 

Net income (loss) attributable to EchoStar Corporation common stock

 

$(40,150)

 

 

 

$(62,917)

 

 

 

$(40,475)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 

$(0.41)

 

 

 

$(1.06)

 

 

 

$(1.39)

 

 

Total basic and diluted earnings (losses) per share

 

$(0.41)

 

 

 

$(0.65)

 

 

 

$(0.42)

 

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)

 

 

For the years ended December 31,

 

 

2020

 

2019

 

2018

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$(51,904)

 

 

 

$(74,252)

 

 

 

$(38,633)

 

 

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

 

 

 

 

 

 

Depreciation and amortization

 

525,011 

 

 

588,200 

 

 

598,178 

 

Impairment of long-lived assets

 

1,685 

 

 

— 

 

 

65,220 

 

Losses (gains) on investments, net

 

31,306 

 

 

(28,912)

 

 

12,109 

 

Equity in losses (earnings) of unconsolidated affiliates, net

 

7,267 

 

 

14,734 

 

 

6,037 

 

Foreign currency transaction losses (gains), net

 

(6,015)

 

 

11,590 

 

 

15,583 

 

Deferred tax provision (benefit), net

 

18,147 

 

 

32,542 

 

 

26,327 

 

Stock-based compensation

 

8,887 

 

 

9,353 

 

 

9,990 

 

Amortization of debt issuance costs

 

4,324 

 

 

5,912 

 

 

7,923 

 

Dividends received from unconsolidated affiliates

 

— 

 

 

2,716 

 

 

10,000 

 

Other, net

 

(12,501)

 

 

6,297 

 

 

(3,489)

 

Changes in assets and current liabilities, net:

 

 

 

 

 

 

Trade accounts receivable and contract assets, net

 

2,237 

 

 

8,289 

 

 

(17,842)

 

Other current assets, net

 

(12,984)

 

 

(39,190)

 

 

18,577 

 

Trade accounts payable

 

(12,339)

 

 

13,149 

 

 

9,562 

 

Contract liabilities

 

3,509 

 

 

26,376 

 

 

7,867 

 

Accrued expenses and other current liabilities

 

42,822 

 

 

66,352 

 

 

12,183 

 

Non-current assets and non-current liabilities, net

 

(15,064)

 

 

13,166 

 

 

(5,070)

 

Net cash flows from operating activities

 

534,388 

 

 

656,322 

 

 

734,522 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of marketable investment securities

 

(2,799,838)

 

 

(993,369)

 

 

(2,973,254)

 

Sales and maturities of marketable investment securities

 

2,110,336 

 

 

2,391,220 

 

 

1,498,463 

 

Expenditures for property and equipment

 

(408,798)

 

 

(418,584)

 

 

(555,141)

 

Expenditures for externally marketed software

 

(38,655)

 

 

(29,310)

 

 

(31,639)

 

Purchase of other investments

 

(5,500)

 

 

(93,687)

 

 

— 

 

Investments in unconsolidated affiliates

 

— 

 

 

(2,149)

 

 

(115,991)

 

Purchases of regulatory authorizations

 

— 

 

 

(34,447)

 

 

— 

 

Refunds and other receipts related to property and equipment

 

— 

 

 

— 

 

 

77,524 

 

Dividend received from unconsolidated affiliate

 

— 

 

 

2,284 

 

 

— 

 

Sale of investment in unconsolidated affiliates

 

— 

 

 

— 

 

 

1,558 

 

Net cash flows from investing activities

 

(1,142,455)

 

 

821,958 

 

 

(2,098,480)

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repurchase and maturity of the 2019 Senior Secured Notes

 

— 

 

 

(920,923)

 

 

(70,173)

 

Repayment of other long-term debt and finance lease obligations

 

(811)

 

 

(29,347)

 

 

(41,019)

 

Payment of in-orbit incentive obligations

 

(1,554)

 

 

(5,447)

 

 

(5,350)

 

Net proceeds from Class A common stock options exercised

 

855 

 

 

67,337 

 

 

4,424 

 

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

 

10,109 

 

 

9,779 

 

 

9,368 

 

Treasury share purchase

 

(43,458)

 

 

— 

 

 

(33,292)

 

Contribution by non-controlling interest holder

 

18,241 

 

 

— 

 

 

— 

 

Purchase of non-controlling interest

 

— 

 

 

(7,313)

 

 

— 

 

Other, net

 

998 

 

 

603 

 

 

(521)

 

Net cash flows from financing activities

 

(15,620)

 

 

(885,311)

 

 

(136,563)

 

Effect of exchange rates on cash and cash equivalents

 

(1,390)

 

 

(575)

 

 

(2,233)

 

Net increase (decrease) in cash and cash equivalents

 

(625,077)

 

 

592,394 

 

 

(1,502,754)

 

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

 

1,521,889 

 

 

929,495 

 

 

2,432,249 

 

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

 

$896,812

 

 

 

$1,521,889

 

 

 

$929,495