EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2018

November 8, 2018

ENGLEWOOD, Colo., Nov. 8, 2018 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2018.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ended September 30, 2018 Financial Highlights:

  • Consolidated revenues of $533.0 million.
  • Consolidated net income from continuing operations of $16.5 million, consolidated net income attributable to EchoStar common stock of $16.1 million, and diluted earnings per share of $0.17.  Included in these amounts are net gains on investments of $4.7 million. Excluding these net gains, diluted earnings per share would have been $0.12.
  • Consolidated EBITDA of $220.2 million, including net gains on investments of $4.7 million.  Excluding these net gains, EBITDA would have been $215.5 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Nine Months Ended September 30, 2018 Financial Highlights:

  • Consolidated revenues of $1,560.7 million.
  • Consolidated net income from continuing operations of $73.0 million, consolidated net income attributable to EchoStar common stock of $71.7 million, and diluted earnings per share of $0.74. Included in these amounts are net gains on investments of $33.4 million. Excluding these net gains, diluted earnings per share would have been $0.40.
  • Consolidated EBITDA of $671.7 million, including net gains on investments of $33.4 million.  Excluding these net gains, EBITDA would have been $638.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,332,000 Hughes broadband subscribers as of September 30, 2018.
  • Cash, cash equivalents and current marketable investment securities of $3.4 billion as of September 30, 2018.

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



For the three months
ended September 30,


For the nine months
ended September 30,



2018


2017


2018


2017



(Dollars in thousands)

Revenue









Hughes


$

444,762



$

380,061



$

1,271,886



$

1,072,143


EchoStar Satellite Services


84,007



97,093



276,185



295,785


Corporate & Other


4,184



4,079



12,631



11,532


Total


$

532,953



$

481,233



$

1,560,702



$

1,379,460











EBITDA









Hughes


$

164,135



$

131,817



$

452,982



$

342,693


EchoStar Satellite Services


72,156



78,345



238,789



241,873


Corporate & Other:









Corporate overhead, operating and other


(21,076)



(14,772)



(50,641)



(44,386)


Equity in earnings (losses) of unconsolidated affiliates, net


416



4,381



(2,651)



15,620


Gains and losses on investments, net


4,549



20,090



33,171



32,238


Sub-total


(16,111)



9,699



(20,121)



3,472


Total


$

220,180



$

219,861



$

671,650



$

588,038











Net income from continuing operations


$

16,502



$

35,855



$

73,015



$

73,221


Net income (loss) from discontinued operations




(654)





6,454


Net income


$

16,502



$

35,201



$

73,015



$

79,675











Expenditures for property and equipment from continuing operations


$

167,155



$

192,131



$

337,729



$

410,145


 

The following table reconciles GAAP to non-GAAP measurements.



For the three months
ended September 30,


For the nine months
ended September 30,



2018


2017


2018


2017



(Dollars in thousands)

Net income


$

16,502



$

35,201



$

73,015



$

79,675











Interest income and expense, net


40,737



43,634



130,134



126,156


Income tax provision, net


12,836



6,082



25,235



9,073


Depreciation and amortization


150,555



134,822



444,558



379,939


Net (income) loss from discontinued operations




654





(6,454)


Net income attributable to noncontrolling interests


(450)



(532)



(1,292)



(351)


EBITDA


$

220,180



$

219,861



$

671,650



$

588,038


 

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 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 September 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 September 30, 2018 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Thursday, November 8, 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 # 1087737.

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 September 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.

 

 

ECHOSTAR CORPORATION
Consolidated Balance Sheets




As of



September 30, 2018


December 31, 2017

Assets


(Unaudited)


(Audited)

Current assets:





Cash and cash equivalents


$

1,597,295



$

2,431,456


Marketable investment securities, at fair value


1,842,875



814,161


Trade accounts receivable and contract assets, net


217,524



196,840


Trade accounts receivable - DISH Network


11,065



43,295


Inventory


70,061



83,595


Prepaids and deposits


56,149



54,533


Other current assets


17,222



91,671


Total current assets


3,812,191



3,715,551


Noncurrent assets:





Property and equipment, net


3,442,537



3,465,471


Regulatory authorizations, net


525,595



536,936


Goodwill


504,173



504,173


Other intangible assets, net


47,912



58,955


Investments in unconsolidated entities


160,669



161,427


Other receivables - DISH Network


94,503



92,687


Other noncurrent assets, net


262,866



214,814


Total noncurrent assets


5,038,255



5,034,463


Total assets


$

8,850,446



$

8,750,014


Liabilities and Stockholders' Equity





Current liabilities:





Trade accounts payable


$

119,235



$

108,406


Trade accounts payable - DISH Network


1,411



4,753


Current portion of long-term debt and capital lease obligations


1,030,088



40,631


Contract liabilities


74,135



65,959


Accrued interest


57,589



47,616


Accrued compensation


41,341



47,756


Accrued taxes


16,681



16,122


Accrued expenses and other


72,464



82,647


Total current liabilities


1,412,944



413,890


Noncurrent liabilities:





Long-term debt and capital lease obligations, net


2,582,819



3,594,213


Deferred tax liabilities, net


471,259



436,023


Other noncurrent liabilities


124,694



128,503


Total noncurrent liabilities


3,178,772



4,158,739


Total liabilities


4,591,716



4,572,629


Commitments and contingencies





Stockholders' equity:





Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of September 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, 54,080,228 shares issued and 48,547,910
  shares outstanding at September 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 September 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 September 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
  September 30, 2018 and December 31, 2017





Additional paid-in capital


3,694,682



3,669,461


Accumulated other comprehensive loss


(160,947)



(130,154)


Accumulated earnings


808,330



721,316


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar Corporation stockholders' equity


4,244,005



4,162,563


Other noncontrolling interests


14,725



14,822


Total stockholders' equity


4,258,730



4,177,385


Total liabilities and stockholders' equity


$

8,850,446



$

8,750,014


 

 

ECHOSTAR CORPORATION
Consolidated Statements of Operations
(In thousands)




For the three months
ended September 30,


For the nine months
ended September 30,



2018


2017


2018


2017

Revenue:









Services and other revenue - DISH Network


$

87,859



$

111,135



$

291,835



$

339,824


Services and other revenue - other


388,248



310,973



1,118,733



865,817


Equipment revenue


56,846



59,125



150,134



173,819


Total revenue


532,953



481,233



1,560,702



1,379,460











Costs and expenses:









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


152,011



143,048



451,913



416,463


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


46,318



47,644



127,254



141,839


Selling, general and administrative expenses


107,490



91,003



313,839



263,820


Research and development expenses


6,544



8,302



20,328



23,444


Depreciation and amortization


150,555



134,822



444,558



379,939


Total costs and expenses


462,918



424,819



1,357,892



1,225,505


Operating income


70,035



56,414



202,810



153,955











Other income (expense):









Interest income


21,349



12,012



56,237



30,342


Interest expense, net of amounts capitalized


(62,086)



(55,646)



(186,371)



(156,498)


Gains and losses on investments, net


4,693



20,090



33,426



30,664


Equity in earnings (losses) of unconsolidated affiliates, net


416



4,381



(2,651)



15,620


Other, net


(5,069)



4,686



(5,201)



8,211


Total other income (expense), net


(40,697)



(14,477)



(104,560)



(71,661)


Income from continuing operations before income taxes


29,338



41,937



98,250



82,294


Income tax provision, net


(12,836)



(6,082)



(25,235)



(9,073)


Net income from continuing operations


16,502



35,855



73,015



73,221


Net income (loss) from discontinued operations




(654)





6,454


Net income


16,502



35,201



73,015



79,675


Less: Net income attributable to noncontrolling interests


450



532



1,292



351


Net income attributable to EchoStar Corporation


16,052



34,669



71,723



79,324


Less: Net loss attributable to Hughes Retail Preferred
Tracking Stock








(1,209)


Net income attributable to EchoStar Corporation
common stock


$

16,052



$

34,669



$

71,723



$

80,533











Earnings per share - Class A and B common stock:









Basic earnings from continuing operations per share


$

0.17



$

0.37



$

0.75



$

0.78


Total basic earnings per share


$

0.17



$

0.36



$

0.75



$

0.84


Diluted earnings from continuing operations per share


$

0.17



$

0.36



$

0.74



$

0.77


Total diluted earnings per share


$

0.17



$

0.36



$

0.74



$

0.83


 

 

ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)




For the nine months ended September 30,



2018


2017

Cash flows from operating activities:





Net income


$

73,015



$

79,675


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





Depreciation and amortization


444,558



391,598


Equity in (earnings) losses of unconsolidated affiliates, net


2,651



(14,461)


Amortization of debt issuance costs


5,910



5,479


Gains and losses on investments, net


(33,524)



(30,664)


Stock-based compensation


7,771



7,169


Deferred tax provision


22,357



7,924


Dividends received from unconsolidated entity


5,000



15,000


Proceeds from sale of trading securities




8,922


Changes in current assets and current liabilities, net:





Trade accounts receivable, net


(35,811)



5,088


Trade accounts receivable - DISH Network


32,323



225,963


Inventory


10,667



(26,231)


Other current assets


(5,569)



(11,392)


Trade accounts payable


2,536



(64,553)


Trade accounts payable - DISH Network


(3,342)



2,534


Accrued expenses and other


19,450



13,268


Changes in noncurrent assets and noncurrent liabilities, net


(16,123)



(23,474)


Other, net


12,043



91


Net cash flows from operating activities


543,912



591,936


Cash flows from investing activities:





Purchases of marketable investment securities


(2,323,090)



(319,912)


Sales and maturities of marketable investment securities


1,331,225



375,890


Expenditures for property and equipment


(415,253)



(422,661)


Refunds and other receipts related to property and equipment


77,524




Sale of investment in unconsolidated entity


1,558



17,781


Expenditures for externally marketed software


(24,568)



(25,447)


Other


(991)




Net cash flows from investing activities


(1,353,595)



(374,349)


Cash flows from financing activities:





Repayment of debt and capital lease obligations


(27,764)



(26,394)


Net proceeds from Class A common stock options exercised


4,424



33,156


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


7,428



6,938


Cash exchanged for Tracking Stock




(651)


Repayment of in-orbit incentive obligations


(4,601)



(4,583)


Other, net


(530)



201


Net cash flows from financing activities


(21,043)



8,667


Effect of exchange rates on cash and cash equivalents


(3,449)



1,014


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


(834,175)



227,268


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


$

1,598,074



$

2,799,134







Supplemental disclosure of cash flow information:





Cash paid for interest, net of amounts capitalized


$

170,303



$

137,955


Cash paid for income taxes


$

3,369



$

10,071


 

 

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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, Sharyn Nerenberg, Phone: +1 301-428-7124, Email: sharyn.nerenberg@echostar.com