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

August 7, 2018

ENGLEWOOD, Colo., Aug. 7, 2018 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ended June 30, 2018.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

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.

 

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


 

 

 

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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