EchoStar Announces Financial Results for Three Months Ended March 31, 2020 May 07, 2020 Englewood, CO, May 7, 2020—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three months ended March 31, 2020. Three Months Ended March 31, 2020 Financial Highlights: Consolidated revenues of $465.7 million. Net loss from continuing operations of $57.7 million, consolidated net loss attributable to EchoStar common stock of $54.3 million, and diluted loss per share of $0.56. Consolidated Adjusted EBITDA of $148.6 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below). “As businesses and families everywhere contend with the impact of COVID-19, EchoStar has focused on keeping our customers connected,” commented Michael Dugan, CEO and President of EchoStar. “The pandemic has demonstrated that staying connected is a necessity, not a luxury, and our solid performance in the first quarter of 2020, despite the global crisis, reflects this reality. We grew our revenue and Adjusted EBITDA from the same period in 2019. Operationally, we increased our consumer subscriber base by approximately 39,000 in the first quarter, driven by both our domestic and international markets, bringing our broadband subscriber total to approximately 1.516 million. We continuously evaluate the changing economic conditions and associated effect on our customers and vendors and are managing the business appropriately. Although these are extremely challenging times, the pandemic has made even more evident the worldwide demand for connectivity.” Three Months Ended March 31, 2020 - Additional Information: Consolidated revenue increased 2% or $11.3 million year over year despite negative foreign exchange impact. Adjusted EBITDA increased 6% or $8.8 million year over year. Hughes segment Adjusted EBITDA was up $0.6 million year over year. The margin driven by the higher revenue was offset by increased sales, marketing, and operating expense associated primarily with our growing Latin American consumer markets. ESS segment Adjusted EBITDA was higher by $0.3 million year over year. Corporate and Other segment Adjusted EBITDA increased by $7.9 million. The segment had equity earnings in unconsolidated affiliates during the quarter of $4.5 million compared to equity losses of $4.8 million in the same period a year ago. This increase was partially offset by the loss of the revenue and EBITDA associated with the transfer of certain real estate assets to DISH Network Corporation as part of the BSS transaction that were not treated as discontinued operations. Net loss from continuing operations was $57.7 million, an increase of loss by $53.5 million from last year. The increased loss was primarily due to higher unrealized and realized losses on investments of $53.6 million which included the write-off of a strategic investment, higher depreciation and amortization of $13.4 million, and higher unrealized losses on foreign currency of $9.7 million. This was partially offset by lower net income tax expense of $10.4 million, higher equity in earnings of $8.9 million, and lower net interest expense of $8.1 million. Hughes broadband subscribers are approximately 1,516,000 as of March 31, 2020 including approximately 267,000 subscribers in Latin America. To help support people working and studying from home, we signed the FCC’s Keeping America Connected Pledge, and our subscriber numbers exclude those whose service would have ordinarily been terminated in the absence of the Pledge. For the three months ended March 31,2020, approximately 66% of Hughes segment revenue was attributable to our consumer customers with approximately 34% attributable to our enterprise customers. Cash, cash equivalents and current marketable investment securities were $2.4 billion as of March 31, 2020. We purchased 196,999 shares of our Class A common stock in the open market. Set forth below is a table highlighting certain of EchoStar’s segment results three months ended March 31, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations): For the three months ended March 31, 2020 2019 Revenue Hughes $458,482 $445,337 EchoStar Satellite Services 4,652 4,033 Corporate and Other 2,532 5,012 Total revenue $465,666 $454,382 Adjusted EBITDA Hughes $162,219 $161,642 EchoStar Satellite Services 2,030 1,729 Corporate & Other: Corporate overhead, operating and other (20,124) (18,719) Equity in earnings (losses) of unconsolidated affiliates, net 4,512 (4,827) Total Corporate & Other (15,612) (23,546) Total Adjusted EBITDA $148,637 $139,825 Net income (loss) from continuing operations $(57,737) $(4,239) Expenditures for property and equipment $104,604 $111,854 Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands): For the three months ended March 31, 2020 2019 Net income (loss) $(57,737) $15,008 Interest income, net (15,583) (24,429) Interest expense, net of amounts capitalized 36,233 53,199 Income tax provision (benefit), net (7,492) 2,898 Depreciation and amortization 132,368 118,978 Net loss (income) from discontinued operations — (19,247) Net loss (income) attributable to non-controlling interests 3,442 (806) EBITDA 91,231 145,601 (Gains) losses on investments, net 46,672 (6,936) License fee dispute - India, net of non-controlling interests (110) — Foreign currency transaction (gains) losses, net 10,844 1,160 Adjusted EBITDA $148,637 $139,825 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 noncontrolling 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 March 31, 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 March 31, 2020 filed today with the Securities and Exchange Commission. EchoStar will host its earnings conference call on Thursday, May 7, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 9193376. 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 March 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 March 31, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $1,599,025 $1,519,431 Marketable investment securities 790,361 940,623 Trade accounts receivable and contract assets, net 187,919 196,629 Other current assets, net 189,887 179,531 Total current assets 2,767,192 2,836,214 Non-current assets: Property and equipment, net 2,428,543 2,528,738 Operating lease right-of-use assets 119,794 114,042 Goodwill 509,315 506,953 Regulatory authorizations, net 471,164 478,598 Other intangible assets, net 25,826 29,507 Other investments, net 298,147 325,405 Other non-current assets, net 339,640 334,841 Total non-current assets 4,192,429 4,318,084 Total assets $6,959,621 $7,154,298 Liabilities and Stockholders’ Equity Current liabilities: Trade accounts payable $107,245 $124,080 Contract liabilities 99,266 101,060 Accrued expenses and other current liabilities 239,706 270,879 Total current liabilities 446,217 496,019 Non-current liabilities: Long-term debt 2,390,218 2,389,168 Deferred tax liabilities, net 339,006 351,692 Operating lease liabilities 105,482 96,941 Other non-current liabilities 73,123 74,925 Total non-current liabilities 2,907,829 2,912,726 Total liabilities 3,354,046 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 March 31, 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, 56,760,433 shares issued and 50,078,513 shares outstanding at March 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 March 31, 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 March 31, 2020 and December 31, 2019 — — Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both March 31, 2020 and December 31, 2019 — — Additional paid-in capital 3,307,360 3,290,483 Accumulated other comprehensive income (loss) (192,218) (122,138) Accumulated earnings (losses) 569,446 632,809 Treasury stock, at cost (137,347) (131,454) Total EchoStar Corporation stockholders’ equity 3,547,346 3,669,805 Non-controlling interests 58,229 75,748 Total stockholders’ equity 3,605,575 3,745,553 Total liabilities and stockholders’ equity $6,959,621 $7,154,298 ECHOSTAR CORPORATION Condensed Consolidated Statements of Operations (Amounts in thousands, except per share amounts) For the three months ended March 31, 2020 2019 Revenue: Services and other revenue $408,357 $402,668 Equipment revenue 57,309 51,714 Total revenue 465,666 454,382 Costs and expenses: Cost of sales - services and other (exclusive of depreciation and amortization) 145,252 143,347 Cost of sales - equipment (exclusive of depreciation and amortization) 45,908 45,007 Selling, general and administrative expenses 125,281 112,114 Research and development expenses 6,254 6,888 Depreciation and amortization 132,368 118,978 Total costs and expenses 455,063 426,334 Operating income (loss) 10,603 28,048 Other income (expense): Interest income, net 15,583 24,429 Interest expense, net of amounts capitalized (36,233) (53,199) Gains (losses) on investments, net (46,672) 6,936 Equity in earnings (losses) of unconsolidated affiliates, net 2,613 (6,353) Foreign currency transaction gains (losses), net (10,844) (1,160) Other, net (279) (42) Total other income (expense), net (75,832) (29,389) Income (loss) from continuing operations before income taxes (65,229) (1,341) Income tax benefit (provision), net 7,492 (2,898) Net income (loss) from continuing operations (57,737) (4,239) Net income (loss) from discontinued operations — 19,247 Net income (loss) (57,737) 15,008 Less: Net loss (income) attributable to non-controlling interests 3,442 (806) Net income (loss) attributable to EchoStar Corporation common stock $(54,295) $14,202 Earnings (losses) per share - Class A and B common stock: Basic and diluted earnings (losses) from continuing operations per share $(0.56) $(0.05) Total basic and diluted earnings (losses) per share $(0.56) $0.15 ECHOSTAR CORPORATION Condensed Consolidated Statements of Cash Flows (Amounts in thousands, except per share amounts) For the three months ended March 31, 2020 2019 Cash flows from operating activities: Net income (loss) $(57,737) $15,008 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 132,368 154,221 Losses (gains) on investments, net 46,672 (6,418) Equity in losses (earnings) of unconsolidated affiliates, net (2,613) 6,353 Foreign currency transaction losses (gains), net 10,844 1,160 Deferred tax provision (benefit), net (10,064) 6,455 Stock-based compensation 2,384 2,628 Amortization of debt issuance costs 1,050 2,010 Other, net (4,899) 1,754 Changes in assets and liabilities, net: Trade accounts receivable and contract assets, net (7,664) (19,231) Other current assets, net (16,127) (10,370) Trade accounts payable (9,559) 8,831 Contract liabilities (3,212) 17,896 Accrued expenses and other current liabilities (4,922) (9,914) Non-current assets and non-current liabilities, net (5,226) 5,563 Net cash flows from operating activities 71,295 175,946 Cash flows from investing activities: Purchases of marketable investment securities (550,891) (325,557) Sales and maturities of marketable investment securities 687,579 712,666 Purchase of other investments (5,500) — Expenditures for property and equipment (104,604) (111,962) Expenditures for externally marketed software (8,638) (7,600) Net cash flows from investing activities 17,946 267,547 Cash flows from financing activities: Repurchase of the 2019 Senior Secured Notes — (8,046) Payment of finance lease obligations (215) (9,882) Payment of in-orbit incentive obligations (801) (1,573) Net proceeds from Class A common stock options exercised 150 2,047 Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 2,924 2,749 Treasury share purchase (5,893) — Contribution by non-controlling interest holder 4,000 — Purchase of non-controlling interest — (7,313) Other, net 817 (131) Net cash flows from financing activities 982 (22,149) Effect of exchange rates on cash and cash equivalents (4,809) (133) Net increase (decrease) in cash and cash equivalents 85,414 421,211 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 $1,607,303 $1,350,706 Popular Press Releases April 03, 2019 U.S. Army Selects Hughes for Cooperative R&D Effort to Recommend Network Upgrades for Next-Generation, Friendly Forces Monitoring SystemTwo-Year Study to Support Blue Force Tracking Upgrades as Part of Network Modernization Efforts Germantown, MD, April 03, 2019—Hughes Network...Read More April 02, 2019 Hughes Named “Top Performer” in 2019 SD-WAN Customer Success ReportFeaturedCustomers platform recognizes outstanding customer satisfaction with HughesON Managed SD-WAN Germantown, MD, April 2, 2019 – Hughes Network...Read More