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EchoStar Announces Financial Results for Three and Six Months Ended June 30, 2018

Englewood, CO, August 7, 2018 — EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ended June 30, 2018.

Three Months Ended June 30, 2018 Financial Highlights:

  • Consolidated revenues of $526.0 million.
  • Consolidated net income from continuing operations of $77.7 million, consolidated net income attributable to EchoStar common stock of $77.2 million, and diluted earnings per share of $0.80.  Included in these amounts are net gains on investments of $65.4 million. Excluding these net gains, diluted earnings per share would have been $0.12.
  • Consolidated EBITDA of $285.8 million, including net gains on investments of $65.4 million. Excluding these net gains, EBITDA would have been $220.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Six Months Ended June 30, 2018 Financial Highlights:

  • Consolidated revenues of $1,027.7 million.
  • Consolidated net income from continuing operations of $56.5 million, consolidated net income attributable to EchoStar common stock of $55.7 million, and diluted earnings per share of $0.57. Included in these amounts are net gains on investments of $28.7 million. Excluding these net gains, diluted earnings per share would have been $0.28.
  • Consolidated EBITDA of $451.5 million, including net gains on investments of $28.7 million. Excluding these net gains, EBITDA would have been $422.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,298,000 Hughes broadband subscribers as of June 30, 2018.
  • Cash, cash equivalents and current marketable investment securities of $3.4 billion as of June 30, 2018.

 

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and six months ended June 30, 2018 and 2017:

 

 

For the three months
ended June 30,

 

For the six months
ended June 30,

 

 

2018

 

2017

 

2018

 

2017

 

 

(Dollars in thousands)

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$

426,306

 

 

$

362,762

 

 

$

827,124

 

 

$

692,082

 

EchoStar Satellite Services

 

95,425

 

 

98,366

 

 

192,178

 

 

198,692

 

Corporate & Other

 

4,226

 

 

3,948

 

 

8,447

 

 

7,453

 

Total

 

$

525,957

 

 

$

465,076

 

 

$

1,027,749

 

 

$

898,227

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$

152,134

 

 

$

110,024

 

 

$

288,847

 

 

$

210,876

 

EchoStar Satellite Services

 

82,483

 

 

80,465

 

 

166,633

 

 

163,528

 

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(11,695

)

 

(10,662

)

 

(29,565

)

 

(29,614

)

Equity in earnings (losses) of unconsolidated affiliates, net

 

(2,058

)

 

4,831

 

 

(3,067

)

 

11,239

 

Gains (losses) on investments, net

 

64,891

 

 

205

 

 

28,622

 

 

12,148

 

Sub-total

 

51,137

 

 

(5,626

)

 

(4,010

)

 

(6,227

)

Total

 

$

285,754

 

 

$

184,863

 

 

$

451,470

 

 

$

368,177

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

77,684

 

 

$

6,591

 

 

$

56,513

 

 

$

37,366

 

Net income from discontinued operations

 

 

 

531

 

 

 

 

7,108

 

Net income

 

$

77,684

 

 

$

7,122

 

 

$

56,513

 

 

$

44,474

 

 

 

 

 

 

 

 

 

 

Expenditures for property and equipment from continuing operations

 

$

119,592

 

 

$

128,064

 

 

$

170,574

 

 

$

218,014

 

 

The following table reconciles GAAP to non-GAAP measurements.

 

 

For the three months
ended June 30,

 

For the six months
ended June 30,

 

 

2018

 

2017

 

2018

 

2017

 

 

(Dollars in thousands)

Net income (loss)

 

$

77,684

 

 

$

7,122

 

 

$

56,513

 

 

$

44,474

 

 

 

 

 

 

 

 

 

 

Interest income and expense, net

 

42,281

 

 

45,417

 

 

89,397

 

 

82,522

 

Income tax provision, net

 

17,802

 

 

3,003

 

 

12,399

 

 

2,991

 

Depreciation and amortization

 

148,449

 

 

130,034

 

 

294,003

 

 

245,117

 

Net income from discontinued operations

 

 

 

(531

)

 

 

 

(7,108

)

Net (income) loss attributable to noncontrolling interests

 

(462

)

 

(182

)

 

(842

)

 

181

 

EBITDA

 

285,754

 

 

184,863

 

 

451,470

 

 

368,177

 

 

 

 

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 determined in accordance with US 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 US GAAP.  Our management uses this non-GAAP measure as a measure of our operating efficiency and overall operating 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 June 30, 2018 and 2017 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 June 30, 2018 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Tuesday, August 7, 2018 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 8252368.

 

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, 2017 and Quarterly Report on Form 10-Q for the period ended June 30, 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.

 

###

Contact Information

EchoStar Investor Relations

EchoStar Media Relations

Deepak V. Dutt

Phone: +1 301-428-1686

Email: deepak.dutt@echostar.com

Sharyn Nerenberg

Phone: +1 301-428-7124

Email: sharyn.nerenberg@echostar.com

 

 

ECHOSTAR CORPORATION

Consolidated Balance Sheets

 

                                                                                                           As of

 

 

 

June 30, 2018

 

December 31, 2017

Assets

 

(Unaudited)

 

(Audited)

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,793,053

 

 

$

2,431,456

 

Marketable investment securities, at fair value

 

1,640,776

 

 

814,161

 

Trade accounts receivable and contract assets, net (Note 3)

 

186,962

 

 

196,840

 

Trade accounts receivable - DISH Network, net

 

26,126

 

 

43,295

 

Inventory

 

81,388

 

 

83,595

 

Prepaids and deposits

 

58,911

 

 

54,533

 

Other current assets

 

15,889

 

 

91,671

 

Total current assets

 

3,803,105

 

 

3,715,551

 

Noncurrent assets:

 

 

 

 

Property and equipment, net

 

3,396,616

 

 

3,465,471

 

Regulatory authorizations, net

 

528,346

 

 

536,936

 

Goodwill

 

504,173

 

 

504,173

 

Other intangible assets, net of accumulated amortization of $309,690 and $302,345, respectively

 

51,593

 

 

58,955

 

Investments in unconsolidated entities

 

156,022

 

 

161,427

 

Other receivables - DISH Network

 

93,893

 

 

92,687

 

Other noncurrent assets, net

 

258,237

 

 

214,814

 

Total noncurrent assets

 

4,988,880

 

 

5,034,463

 

Total assets

 

$

8,791,985

 

 

$

8,750,014

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$

100,235

 

 

$

108,406

 

Trade accounts payable - DISH Network

 

1,393

 

 

4,753

 

Current portion of long-term debt and capital lease obligations

 

1,028,119

 

 

40,631

 

Contract liabilities

 

72,776

 

 

65,959

 

Accrued interest

 

45,857

 

 

47,616

 

Accrued compensation

 

42,612

 

 

47,756

 

Accrued taxes

 

15,719

 

 

16,122

 

Accrued expenses and other

 

68,195

 

 

82,647

 

Total current liabilities

 

1,374,906

 

 

413,890

 

Noncurrent liabilities:

 

 

 

 

Long-term debt and capital lease obligations, net

 

2,592,174

 

 

3,594,213

 

Deferred tax liabilities, net

 

456,401

 

 

436,023

 

Other noncurrent liabilities

 

124,252

 

 

128,503

 

Total noncurrent liabilities

 

3,172,827

 

 

4,158,739

 

Total liabilities

 

4,547,733

 

 

4,572,629

 

Commitments and contingencies (Note 15)

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of June 30, 2018 and December 31, 2017

 

 

 

 

Common stock, $.001 par value, 4,000,000,000 shares authorized:

 

 

 

 

Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 54,006,419 shares issued and 48,474,101 shares outstanding at June 30, 2018 and 53,663,859 shares issued and 48,131,541 shares outstanding at December 31, 2017

 

54

 

 

54

 

Class B convertible common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of June 30, 2018 and December 31, 2017

 

48

 

 

48

 

Class C convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2018 and December 31, 2017

 

 

 

 

Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2018 and December 31, 2017

 

 

 

 

Additional paid-in capital

 

3,689,180

 

 

3,669,461

 

Accumulated other comprehensive loss

 

(154,011

)

 

(130,154

)

Accumulated earnings

 

792,278

 

 

721,316

 

Treasury stock, at cost

 

(98,162

)

 

(98,162

)

Total EchoStar Corporation stockholders’ equity

 

4,229,387

 

 

4,162,563

 

Other noncontrolling interests

 

14,865

 

 

14,822

 

Total stockholders’ equity

 

4,244,252

 

 

4,177,385

 

Total liabilities and stockholders’ equity

 

$

8,791,985

 

 

$

8,750,014

 

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(In thousands)

 

 

 

For the three months
ended June 30,

 

For the six months
ended June 30,

 

 

2018

 

2017

 

2018

 

2017

Revenue:

 

 

 

 

 

 

 

 

Services and other revenue - DISH Network

 

$

100,171

 

 

$

113,734

 

 

$

203,976

 

 

$

228,689

 

Services and other revenue - other

 

375,445

 

 

285,053

 

 

730,485

 

 

554,844

 

Equipment revenue

 

50,341

 

 

66,289

 

 

93,288

 

 

114,694

 

Total revenue

 

525,957

 

 

465,076

 

 

1,027,749

 

 

898,227

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

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

 

151,157

 

 

138,227

 

 

299,902

 

 

273,415

 

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

 

41,865

 

 

53,662

 

 

80,936

 

 

94,195

 

Selling, general and administrative expenses

 

103,074

 

 

89,826

 

 

206,349

 

 

172,817

 

Research and development expenses

 

6,647

 

 

7,437

 

 

13,784

 

 

15,142

 

Depreciation and amortization

 

148,449

 

 

130,034

 

 

294,003

 

 

245,117

 

Total costs and expenses

 

451,192

 

 

419,186

 

 

894,974

 

 

800,686

 

Operating income

 

74,765

 

 

45,890

 

 

132,775

 

 

97,541

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

19,253

 

 

10,039

 

 

34,888

 

 

18,330

 

Interest expense, net of amounts capitalized

 

(61,534

)

 

(55,456

)

 

(124,285

)

 

(100,852

)

Gains (losses) on investments, net

 

65,396

 

 

1,837

 

 

28,733

 

 

10,574

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(2,058

)

 

4,831

 

 

(3,067

)

 

11,239

 

Other, net

 

(336

)

 

2,453

 

 

(132

)

 

3,525

 

Total other income (expense), net

 

20,721

 

 

(36,296

)

 

(63,863

)

 

(57,184

)

Income from continuing operations before income taxes

 

95,486

 

 

9,594

 

 

68,912

 

 

40,357

 

Income tax provision, net

 

(17,802

)

 

(3,003

)

 

(12,399

)

 

(2,991

)

Net income from continuing operations

 

77,684

 

 

6,591

 

 

56,513

 

 

37,366

 

Net income from discontinued operations

 

 

 

531

 

 

 

 

7,108

 

Net income

 

77,684

 

 

7,122

 

 

56,513

 

 

44,474

 

Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (Note 1)

 

 

 

 

 

 

 

(655

)

Less: Net income attributable to other noncontrolling interests

 

462

 

 

182

 

 

842

 

 

474

 

Net income attributable to EchoStar Corporation

 

77,222

 

 

6,940

 

 

55,671

 

 

44,655

 

Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 1)

 

 

 

 

 

 

 

(1,209

)

Net income attributable to EchoStar Corporation common stock

 

$

77,222

 

 

$

6,940

 

 

$

55,671

 

 

$

45,864

 

 

 

 

 

 

 

 

 

 

Earnings per share - Class A and B common stock:

 

 

 

 

 

 

 

 

Basic earnings from continuing operations per share

 

$

0.80

 

 

$

0.07

 

 

$

0.58

 

 

$

0.41

 

Total basic earnings per share

 

$

0.80

 

 

$

0.07

 

 

$

0.58

 

 

$

0.48

 

Diluted earnings from continuing operations per share

 

$

0.80

 

 

$

0.07

 

 

$

0.57

 

 

$

0.40

 

Total diluted earnings per share

 

$

0.80

 

 

$

0.07

 

 

$

0.57

 

 

$

0.48

 

 

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

For the six months ended June 30,

 

 

2018

 

2017

Cash flows from operating activities:

 

 

 

 

Net income

 

$

56,513

 

 

$

44,474

 

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

 

Depreciation and amortization

 

294,003

 

 

256,776

 

Equity in (earnings) losses of unconsolidated affiliates, net

 

3,067

 

 

(10,080

)

Amortization of debt issuance costs

 

3,905

 

 

3,617

 

(Gains) losses and impairments on investments, net

 

(28,674

)

 

(10,574

)

Stock-based compensation

 

5,110

 

 

3,908

 

Deferred tax provision

 

10,231

 

 

673

 

Dividend received from unconsolidated entity

 

5,000

 

 

7,500

 

Proceeds from sale of trading securities

 

 

 

8,922

 

Changes in current assets and current liabilities, net:

 

 

 

 

Trade accounts receivable, net

 

(3,061

)

 

4,496

 

Trade accounts receivable - DISH Network

 

17,262

 

 

184,077

 

Inventory

 

238

 

 

(24,330

)

Other current assets

 

(5,430

)

 

(6,193

)

Trade accounts payable

 

2,364

 

 

(65,179

)

Trade accounts payable - DISH Network

 

(3,360

)

 

(3,061

)

Accrued expenses and other

 

7,749

 

 

(2,505

)

Changes in noncurrent assets and noncurrent liabilities, net

 

(17,200

)

 

(11,763

)

Other, net

 

5,822

 

 

2,121

 

Net cash flows from operating activities

 

353,539

 

 

382,879

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investment securities

 

(1,632,930

)

 

(46,533

)

Sales and maturities of marketable investment securities

 

841,638

 

 

291,082

 

Expenditures for property and equipment

 

(248,098

)

 

(230,530

)

Refunds and other receipts related to property and equipment

 

77,524

 

 

 

Sale of investment in unconsolidated entity

 

 

 

17,781

 

Expenditures for externally marketed software

 

(15,000

)

 

(17,119

)

Net cash flows from investing activities

 

(976,866

)

 

14,681

 

Cash flows from financing activities:

 

 

 

 

Repayment of debt and capital lease obligations

 

(18,417

)

 

(17,718

)

Net proceeds from Class A common stock options exercised

 

4,064

 

 

31,992

 

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

 

4,886

 

 

4,540

 

Cash exchanged for Tracking Stock (Note 1)

 

 

 

(651

)

Repayment of in-orbit incentive obligations

 

(3,272

)

 

(3,194

)

Other, net

 

(401

)

 

482

 

Net cash flows from financing activities

 

(13,140

)

 

15,451

 

Effect of exchange rates on cash and cash equivalents

 

(1,941

)

 

967

 

Net increase (decrease) in cash and cash equivalents, including restricted amounts

 

(638,408

)

 

413,978

 

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

 

2,432,249

 

 

2,571,866

 

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

 

$

1,793,841

 

 

$

2,985,844

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

$

122,017

 

 

$

96,463

 

Cash paid for income taxes

 

$

2,574

 

 

$

9,369