EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2017

August 9, 2017

ENGLEWOOD, Colo., Aug. 9, 2017 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ending June 30, 2017.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ending June 30, 2017 Financial Highlights:

  • Consolidated revenues of $465 million.
  • Consolidated net income from continuing operations of $6.6 million, consolidated net income attributable to EchoStar common stock of $6.9 million and diluted earnings per share of 0.07.
    • Consolidated net income from continuing operations declined compared to the three months ended June 30, 2016 primarily due to:
      • An increase of $22.3 million in interest expense from the issuance of bonds in July 2016;
      • A decrease of $13.1 million in capitalized interest relating to satellites placed into service in 2017; and
      • An increase of $24.0 million in depreciation expense primarily on those satellites;
      • Partially offset by a decrease in income tax expense of $20.7 million.
    • Consolidated EBITDA of $185 million (see reconciliation of this non-GAAP measure below).

Six Months Ended June 30, 2017 Financial Highlights:

  • Consolidated revenue of $898 million.
  • Consolidated net income from continuing operations of $37.4 million, consolidated net income attributable to EchoStar common stock of $45.9 million and diluted earnings per share of $0.48.
  • Consolidated EBITDA of $368 million (see reconciliation of this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,085,000 Hughes broadband subscribers as of June 30, 2017.
  • Cash, cash equivalents and  current marketable investment securities of $3.27 billion as of June 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 six months ended June 30, 2017 and 2016:



For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2017


2016


2017


2016



(Dollars in thousands)

Revenue









Hughes


$

362,762



$

339,337



$

692,082



$

665,575


EchoStar Satellite Services


98,366



101,450



198,692



204,439


Corporate & Other


3,948



1,871



7,453



4,618


Total


$

465,076



$

442,658



$

898,227



$

874,632











EBITDA









Hughes


$

110,024



$

117,627



$

210,876



$

227,983


EchoStar Satellite Services


80,465



84,284



163,528



172,924


Corporate & Other


(5,626)



(11,585)



(6,227)



(25,029)


Total


$

184,863



$

190,326



$

368,177



$

375,878











Net income (loss) attributable to EchoStar
common stock


$

6,940



$

56,133



$

45,864



$

106,807


Diluted earnings per share (in dollars)


$

0.07



$

0.60



$

0.48



$

1.14


Net income from continuing operations


$

6,591



$

44,253



$

37,366



$

79,638











Expenditures for property and equipment from continuing operations


$

128,064



$

132,449



$

218,014



$

338,244


The following table reconciles total consolidated Net income to EBITDA.



For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2017


2016


2017


2016



(Dollars in thousands)

Net income


$

7,122



$

55,909



$

44,474



$

104,352











Interest income and expense, net


45,417



16,387



82,522



35,593


Income tax provision


3,003



23,692



2,991



43,864


Depreciation and amortization


130,034



106,117



245,117



216,194


Net income from discontinued operations


(531)



(11,656)



(7,108)



(24,714)


Net (income) loss attributable to noncontrolling 
     interests


(182)



(123)



181



589


EBITDA


$

184,863



$

190,326



$

368,177



$

375,878


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 June 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 June 30, 2017 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Wednesday, August 9, 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 # 63515337.

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 June 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



June 30, 2017


December 31, 2016

Assets





Current Assets:





Cash and cash equivalents


$

2,985,062



$

2,570,365


Marketable investment securities, at fair value


280,402



522,516


Trade accounts receivable, net of allowance for doubtful accounts of $12,541 and $12,956, respectively


192,246



182,527


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


56,825



19,417


Inventory


91,265



62,620


Prepaids and deposits


52,857



43,456


Other current assets


12,035



10,862


Current assets of discontinued operations


37,814



311,524


Total current assets


3,708,506



3,723,287


Noncurrent Assets:





Restricted cash and marketable investment securities


13,847



12,926


Property and equipment, net of accumulated depreciation of $2,661,897 and $2,598,492, respectively


3,451,362



3,398,195


Regulatory authorizations, net


544,310



544,633


Goodwill


504,173



504,173


Other intangible assets, net


66,316



80,734


Investments in unconsolidated entities


174,067



171,016


Other receivable - DISH Network


91,579



90,586


Other noncurrent assets, net


189,511



166,385


Noncurrent assets of discontinued operations




316,924


Total noncurrent assets


5,035,165



5,285,572


Total assets


$

8,743,671



$

9,008,859


Liabilities and Stockholders' Equity





Current Liabilities:





Trade accounts payable


$

118,563



$

170,297


Trade accounts payable - DISH Network


961



1,072


Current portion of long-term debt and capital lease obligations


39,229



32,984


Deferred revenue and prepayments


54,722



59,989


Accrued interest


46,280



46,487


Accrued compensation


37,978



53,454


Accrued expenses and other


106,366



95,726


Current liabilities of discontinued operations


3,071



71,429


Total current liabilities


407,170



531,438


Noncurrent Liabilities:





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


3,611,746



3,622,463


Deferred tax liabilities, net


736,100



746,667


Other noncurrent liabilities


131,931



90,785


Noncurrent liabilities of discontinued operations




10,701


Total noncurrent liabilities


4,479,777



4,470,616


Total liabilities


4,886,947



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 June 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, 53,486,261 shares issued and 47,953,943 shares 
     outstanding at June 30, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016


53



52


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





Additional paid-in capital


3,654,139



3,828,677


Accumulated other comprehensive loss


(86,068)



(124,803)


Accumulated earnings


373,410



314,247


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar stockholders' equity


3,843,420



3,920,065


Noncontrolling interest in HSS Tracking Stock




73,910


Other noncontrolling interests


13,304



12,830


Total stockholders' equity


3,856,724



4,006,805


Total liabilities and stockholders' equity


$

8,743,671



$

9,008,859


 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands)




For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2017


2016


2017


2016

Revenue:









Services and other revenue - DISH Network


$

113,734



$

115,864



$

228,689



$

232,313


Services and other revenue - other


285,053



273,972



554,844



543,869


Equipment revenue - DISH Network


18



2,101



49



4,870


Equipment revenue - other


66,271



50,721



114,645



93,580


Total revenue


465,076



442,658



898,227



874,632


Costs and Expenses:









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


134,024



127,766



265,807



253,348


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


57,865



46,545



101,803



89,653


Selling, general and administrative expenses


89,826



79,237



172,817



159,782


Research and development expenses


7,437



7,562



15,142



14,494


Depreciation and amortization


130,034



106,117



245,117



216,194


Total costs and expenses


419,186



367,227



800,686



733,471


Operating income


45,890



75,431



97,541



141,161











Other Income (Expense):









Interest income


10,039



3,502



18,330



7,467


Interest expense, net of amounts capitalized


(55,456)



(19,889)



(100,852)



(43,060)


Gains on investments, net


1,837



5,487



13,872



7,949


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






(3,298)




Equity in earnings of unconsolidated affiliates, net


4,831



5,626



11,239



4,818


Other, net


2,453



(2,212)



3,525



5,167


Total other expense, net


(36,296)



(7,486)



(57,184)



(17,659)


Income from continuing operations before income taxes


9,594



67,945



40,357



123,502


Income tax provision


(3,003)



(23,692)



(2,991)



(43,864)


Net income from continuing operations


6,591



44,253



37,366



79,638


Net income from discontinued operations


531



11,656



7,108



24,714


Net income


7,122



55,909



44,474



104,352


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




(188)



(655)



(1,011)


Less: Net income attributable to other noncontrolling interests


182



311



474



422


Net income attributable to EchoStar


6,940



55,786



44,655



104,941


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock




(347)



(1,209)



(1,866)


Net income attributable to EchoStar common stock


$

6,940



$

56,133



$

45,864



$

106,807











Amounts attributable to EchoStar common stock:









Net income from continuing operations


$

6,409



$

44,477



$

38,756



$

82,093


Net income from discontinued operations


531



11,656



7,108



24,714


Net income attributable to EchoStar common stock


$

6,940



$

56,133



$

45,864



$

106,807











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







Basic


95,537



93,751



95,143



93,541


Diluted


96,785



94,330



96,451



94,090











Earnings per share - Class A and B common stock:









Basic:









Continuing operations


$

0.07



$

0.47



$

0.41



$

0.88


Discontinued operations




0.13



0.07



0.26


Total basic earnings per share


$

0.07



$

0.60



$

0.48



$

1.14


Diluted:









Continuing operations


$

0.07



$

0.47



$

0.40



$

0.87


Discontinued operations




0.13



0.08



0.27


Total diluted earnings per share


$

0.07



$

0.60



$

0.48



$

1.14



 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)




For the Six Months Ended June 30,



2017


2016

Cash Flows from Operating Activities:





Net income


$

44,474



$

104,352


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





Depreciation and amortization


256,776



247,239


Equity in earnings of unconsolidated affiliates, net


(10,080)



(6,017)


Gain and impairment on investments, net


(10,574)



(7,949)


Stock-based compensation


3,908



8,328


Deferred tax provision


673



53,091


Dividends received from unconsolidated entity


7,500



10,000


Proceeds from sale of trading securities


8,922



7,140


Changes in current assets and current liabilities, net


87,305



(73,916)


Changes in noncurrent assets and noncurrent liabilities, net


(11,763)



2,859


Other, net


5,738



10,507


Net cash flows from operating activities


382,879



355,634


Cash Flows from Investing Activities:





Purchases of marketable investment securities


(46,533)



(641,358)


Sales and maturities of marketable investment securities


291,944



500,775


Expenditures for property and equipment


(230,530)



(376,856)


Refunds and other receipts related to capital expenditures




24,087


Changes in restricted cash and marketable investment securities


(921)



(1,689)


Investments in unconsolidated entities




(1,636)


Sale of investment in unconsolidated entity


17,781




Expenditures for externally marketed software


(17,119)



(12,299)


Other, net




1,462


Net cash flows from investing activities


14,622



(507,514)


Cash Flows from Financing Activities:





Repayment of debt and capital lease obligations


(17,718)



(20,433)


Net proceeds from Class A common stock options exercised


31,992



2,975


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


4,540



7,530


Cash exchanged for Tracking Stock


(651)




Other, net


(2,712)



(1,320)


Net cash flows from financing activities


15,451



(11,248)


Effect of exchange rates on cash and cash equivalents


967



728


Net increase (decrease) in cash and cash equivalents


413,919



(162,400)


Cash and cash equivalents, beginning of period


2,571,143



924,240


Cash and cash equivalents, end of period


$

2,985,062



$

761,840







Supplemental Disclosure of Cash Flow Information:





Cash paid for interest (including capitalized interest)


$

130,231



$

87,213


Capitalized interest


$

33,768



$

47,093


Cash paid for income taxes


$

9,369



$

6,199


Employee benefits paid in Class A common stock


$

11,200



$

11,126


Property and equipment financed under capital lease obligations


$

8,189



$

6,857


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


$

(3,404)



$

8,238


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