EchoStar Announces Financial Results for Three and Nine Months Ending September 30, 2017

November 8, 2017

ENGLEWOOD, Colo., Nov. 8, 2017 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ending September 30, 2017.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ending September 30, 2017 Financial Highlights:

  • Consolidated revenues of $481 million.
  • Consolidated net income from continuing operations of $35.9 million, consolidated net income attributable to EchoStar common stock of $34.7 million and diluted earnings per share of $0.36.
  • Consolidated EBITDA of $220 million (see reconciliation of this non-GAAP measure below).

Nine Months Ended September 30, 2017 Financial Highlights:

  • Consolidated revenue of $1.38 billion.
  • Consolidated net income from continuing operations of $73.2 million, consolidated net income attributable to EchoStar common stock of $80.5 million and diluted earnings per share of $0.83.
  • Consolidated EBITDA of $588 million (see reconciliation of this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,140,000 Hughes broadband subscribers as of September 30, 2017.
  • Cash, cash equivalents and current marketable investment securities of $3.28 billion as of September 30, 2017

Starting with the quarter that ended March 31, 2017, we changed the way we present our segments. Previously, our business segments reflected an allocation of the costs of our corporate functions. Under our new presentation, these costs are no longer allocated to the operating segments and are now reported as part of the Corporate and Other segment (previously "All Other and Eliminations").

In addition, results of our EchoStar Technology segment, which was transferred to DISH Network Corporation in the Share Exchange transaction, are included in Discontinued Operations.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and nine months ended September 30, 2017 and 2016:

 



For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,



2017


2016


2017


2016



(Dollars in thousands)

Revenue









Hughes


$

380,061



$

355,876



$

1,072,143



$

1,021,451


EchoStar Satellite Services


97,093



101,480



295,785



305,919


Corporate & Other


4,079



2,690



11,532



7,308


Total


$

481,233



$

460,046



$

1,379,460



$

1,334,678











EBITDA









Hughes


$

131,817



$

125,522



$

342,693



$

353,505


EchoStar Satellite Services


78,345



84,257



241,873



257,181


Corporate & Other


9,699



(20,477)



3,472



(45,506)


Total


$

219,861



$

189,302



$

588,038



$

565,180











Net income (loss) attributable to EchoStar
common stock


$

34,669



$

36,644



$

80,533



$

143,451


Diluted earnings per share (in dollars)


$

0.36



$

0.39



$

0.83



$

1.52


Net income from continuing operations


$

35,855



$

32,911



$

73,221



$

112,549











Capital expenditures from continuing operations


$

192,131



$

139,574



$

410,145



$

477,818


 

 

The following table reconciles total consolidated Net income to EBITDA.

 



For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,



2017


2016


2017


2016



(Dollars in thousands)

Net income


$

35,201



$

37,410



$

79,675



$

141,762











Interest income and expense, net


43,634



31,057



126,156



66,650


Income tax provision


6,082



17,394



9,073



61,258


Depreciation and amortization


134,822



108,549



379,939



324,743


Net (income) loss from discontinued operations


654



(4,499)



(6,454)



(29,213)


Net income attributable to noncontrolling
      interests


(532)



(609)



(351)



(20)


EBITDA


$

219,861



$

189,302



$

588,038



$

565,180


 

Note on Use of Non-GAAP Financial Measures

EBITDA is defined as "Net income" excluding "Interest expense, net of amounts capitalized," "Interest income", "Income tax provision" and "Depreciation and amortization."  EBITDA is not a measure determined in accordance with US GAAP. This non-GAAP measure is reconciled to net income in the table above. EBITDA should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding the underlying operating performance of our business. 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 September 30, 2017 and 2016 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, 2017 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Wednesday, November 8, 2017 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 5279369.

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, 2016 and Quarterly Report on Form 10-Q for the period ended September 30, 2017, each 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

(Dollars in thousands, except per-share amounts)










As of



September 30, 2017


December 31, 2016


Assets






Current Assets:






Cash and cash equivalents


$

2,798,359


$

2,570,365


Marketable investment securities, at fair value


485,035


522,516


Trade accounts receivable, net of allowance for doubtful accounts of $13,211 and $12,956, respectively


192,387


182,527


Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero


52,512


19,417


Inventory


91,232


62,620


Prepaids and deposits


53,536


43,456


Other current assets


12,746


10,862


Current assets of discontinued operations


145


311,524


Total current assets


3,685,952


3,723,287


Noncurrent Assets:






Restricted cash and marketable investment securities


13,736


12,926


Property and equipment, net of accumulated depreciation of $2,551,678 and $2,598,492, respectively


3,530,459


3,398,195


Regulatory authorizations, net


545,557


544,633


Goodwill


504,173


504,173


Other intangible assets, net


62,635


80,734


Investments in unconsolidated entities


165,290


171,016


Other receivable - DISH Network


92,133


90,586


Other noncurrent assets, net


207,221


166,385


Noncurrent assets of discontinued operations



316,924


Total noncurrent assets


5,121,204


5,285,572


Total assets


$

8,807,156


$

9,008,859


Liabilities and Stockholders' Equity






Current Liabilities:






Trade accounts payable


$

120,436


$

170,297


Trade accounts payable - DISH Network


6,556


1,072


Current portion of long-term debt and capital lease obligations


38,407


32,984


Deferred revenue and prepayments


56,285


59,989


Accrued interest


57,837


46,487


Accrued compensation


37,096


53,454


Accrued expenses and other


110,872


95,726


Current liabilities of discontinued operations


542


71,429


Total current liabilities


428,031


531,438


Noncurrent Liabilities:






Long-term debt and capital lease obligations, net of unamortized debt issuance costs


3,605,715


3,622,463


Deferred tax liabilities, net


745,965


746,667


Other noncurrent liabilities


131,626


90,785


Noncurrent liabilities of discontinued operations



10,701


Total noncurrent liabilities


4,483,306


4,470,616


Total liabilities


4,911,337


5,002,054


Commitments and Contingencies (Note 14)






Stockholders' Equity:






Preferred stock, $.001 par value, 20,000,000 shares authorized:






Hughes Retail Preferred Tracking Stock, $.001 par value, zero authorized, issued and outstanding at September 30, 2017 and 13,000,000
     shares authorized and 6,290,499 issued and outstanding at December 31, 2016



6


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






Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,564,095 shares issued and 48,031,777 shares outstanding at
     September 30, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016


54


52


Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of September
     30, 2017 and December 31, 2016


48


48


Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2017 and
     December 31, 2016




Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2017 and
     December 31, 2016




Additional paid-in capital


3,660,696


3,828,677


Accumulated other comprehensive loss


(88,732)


(124,803)


Accumulated earnings


408,079


314,247


Treasury stock, at cost


(98,162)


(98,162)


Total EchoStar stockholders' equity


3,881,983


3,920,065


Noncontrolling interest in HSS Tracking Stock



73,910


Other noncontrolling interests


13,836


12,830


Total stockholders' equity


3,895,819


4,006,805


Total liabilities and stockholders' equity


$

8,807,156


$

9,008,859














 

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands)













For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,



2017


2016


2017


2016

Revenue:









Services and other revenue - DISH Network


$

111,135


$

115,127


$

339,824


$

347,440

Services and other revenue - other


310,973


276,280


865,817


820,149

Equipment revenue - DISH Network


126


2,138


175


7,008

Equipment revenue - other


58,999


66,501


173,644


160,081

Total revenue


481,233


460,046


1,379,460


1,334,678

Costs and Expenses:









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


138,641


131,594


404,448


384,942

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


52,051


53,599


153,854


143,252

Selling, general and administrative expenses


91,003


80,672


263,820


240,454

Research and development expenses


8,302


9,030


23,444


23,524

Depreciation and amortization


134,822


108,549


379,939


324,743

Total costs and expenses


424,819


383,444


1,225,505


1,116,915

Operating income


56,414


76,602


153,955


217,763










Other Income (Expense):









Interest income


12,012


6,259


30,342


13,726

Interest expense, net of amounts capitalized


(55,646)


(37,316)


(156,498)


(80,376)

Gains on investments, net


20,090


230


33,962


8,179

Other-than-temporary impairment loss on available-for-sale securities




(3,298)


Equity in earnings of unconsolidated affiliates, net


4,381


4,166


15,620


8,984

Other, net


4,686


364


8,211


5,531

Total other expense, net


(14,477)


(26,297)


(71,661)


(43,956)

Income from continuing operations before income taxes


41,937


50,305


82,294


173,807

Income tax provision


(6,082)


(17,394)


(9,073)


(61,258)

Net income from continuing operations


35,855


32,911


73,221


112,549

Net income (loss) from discontinued operations


(654)


4,499


6,454


29,213

Net income


35,201


37,410


79,675


141,762

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



85


(655)


(926)

Less: Net income attributable to other noncontrolling interests


532


524


1,006


946

Net income attributable to EchoStar


34,669


36,801


79,324


141,742

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



157


(1,209)


(1,709)

Net income attributable to EchoStar common stock


$

34,669


$

36,644


$

80,533


$

143,451










Amounts attributable to EchoStar common stock:









Net income from continuing operations


$

35,323


$

32,145


$

74,079


$

114,238

Net income (loss) from discontinued operations


(654)


4,499


6,454


29,213

Net income attributable to EchoStar common stock


$

34,669


$

36,644


$

80,533


$

143,451










Weighted-average common shares outstanding - Class A and B common stock:









Basic


95,656


93,898


95,316


93,661

Diluted


96,890


94,401


96,626


94,189










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









Basic:









Continuing operations


$

0.37


$

0.34


$

0.78


$

1.22

Discontinued operations


(0.01)


0.05


0.06


0.31

Total basic earnings per share


$

0.36


$

0.39


$

0.84


$

1.53

Diluted:









Continuing operations


$

0.36


$

0.34


$

0.77


$

1.21

Discontinued operations



0.05


0.06


0.31

Total diluted earnings per share


$

0.36


$

0.39


$

0.83


$

1.52


 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)









For the Nine Months Ended September 30,



2017


2016

Cash Flows from Operating Activities:





Net income


$

79,675


$

141,762

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





Depreciation and amortization


391,598


370,872

Equity in earnings of unconsolidated affiliates, net


(14,461)


(11,181)

Gain and impairment on investments, net


(30,664)


(8,179)

Stock-based compensation


7,169


11,953

Deferred tax provision


7,924


71,422

Dividends received from unconsolidated entities


15,000


15,000

Proceeds from sale of trading securities


8,922


7,140

Changes in current assets and current liabilities, net


144,677


(47,013)

Changes in noncurrent assets and noncurrent liabilities, net


(23,474)


8,097

Other, net


5,570


14,836

Net cash flows from operating activities


591,936


574,709

Cash Flows from Investing Activities:






Purchases of marketable investment securities


(319,912)


(883,288)

Sales and maturities of marketable investment securities


376,648


643,865

Expenditures for property and equipment


(422,661)


(533,669)

Refunds and other receipts related to capital expenditures



24,087

Changes in restricted cash and marketable investment securities


(810)


7,351

Investments in unconsolidated entities



(1,636)

Sale of investment in unconsolidated entity


17,781


Expenditures for externally marketed software


(25,447)


(17,991)

Other, net



1,462

Net cash flows from investing activities


(374,401)


(759,819)

Cash Flows from Financing Activities:





Proceeds from issuance of long-term debt



1,500,000

Payments of debt issuance costs


(414)


(6,275)

Repayment of debt and capital lease obligations


(26,394)


(30,615)

Net proceeds from Class A common stock options exercised


33,156


4,679

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


6,938


11,478

Cash exchanged for Tracking Stock


(651)


Other, net


(3,968)


(3,373)

Net cash flows from financing activities


8,667


1,475,894

Effect of exchange rates on cash and cash equivalents


1,014


684

Net increase in cash and cash equivalents


227,216


1,291,468

Cash and cash equivalents, beginning of period


2,571,143


924,240

Cash and cash equivalents, end of period


$

2,798,359


$

2,215,708






Supplemental Disclosure of Cash Flow Information:





Cash paid for interest (including capitalized interest)


$

183,451


$

97,044

Capitalized interest


$

45,496


$

70,386

Cash paid for income taxes


$

10,071


$

9,187

Employee benefits paid in Class A common stock


$

11,200


$

11,126

Property and equipment financed under capital lease obligations


$

8,423


$

7,172

Increase (decrease) in capital expenditures included in accounts payable, net


$

(3,494)


$

21,951

Capitalized in-orbit incentive obligations


$

43,890


$

Noncash net assets exchanged for Tracking Stock


$

299,425


$

 

 

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SOURCE EchoStar Corporation

EchoStar Investor Relations, Deepak V. Dutt, Phone: +1 301-428-1686, Email: deepak.dutt@echostar.com; EchoStar Media Relations, Doug Gunster, Phone: +1 301-428-2785, Email: doug.gunster@echostar.com